The U.S. government posted a $193 billion budget deficit in March, less than a third of the $660 billion gap a year earlier, the Treasury Department said on Tuesday, as COVID-19 relief outlays fell sharply and tax receipts surged to record levels.
MARCH OUTLAYS OF $508 BILLION
The Treasury said March outlays were $508 billion, down 45% from March 2021, while receipts jumped 18% to $315 billion, a new March record, reflecting a strong U.S. economic recovery.
The March 2021 deficit of $660 billion had been a record for the month, driven by direct payments of $1,400 to millions of Americans under last year's $1.9 trillion American Rescue Plan Act.
For the first six months of the 2022 fiscal year that started on Oct. 1, the Treasury reported a deficit of $668 billion, a 61% drop from the year-ago period.
Year-to-date outlays fell 18% from the first half of fiscal 2021 to $2.79 trillion, while receipts grew 25% to $2.122 trillion, a new first-half record.
The income taxes, reflecting lower unemployment levels compared to March receipts were driven largely by increases in individual withheld and non-withheld income tax over a year ago, a Treasury official said.
At the same time, Labor Department March outlays fell to $4 billion from $52 billion in the year earlier period, while Treasury Department outlays for tax credits fell to $56 billion from $312 billion a year earlier when stimulus payments were made.
INFLATION COSTS
Treasury's interest on the public debt rose 44% in March to $53 billion, and increased 27% to $290 billion for the year-to-date period. The bulk of this increase represents compensation payments to holders of Treasury Inflation-Protected Securities (TIPS), which are designed to shield investors from inflation.
High Consumer Price Index readings in recent months meant that TIPS payments accounted for a $13 billion increase in Treasury interest payments in March compared to March 2021 and a $59 billion increase year-to-date, the official added.
The TIPS payments are based on monthly increases in the Consumer Price Index and could increase further if inflation accelerates or fall if it subsides.
The Labor Department reported on Tuesday that CPI jumped 1.2% in March, the biggest monthly gain since September 2005 as Russia's war against Ukraine boosted the cost of gasoline to record highs.