US budget deficit expands on rise in spending, corporate profits decline

The United States budget deficit expanded in May, driven by rise in spending amid decline in corporate profits that weighed on government revenues. While payroll taxes have risen in the country due to steady hiring, corporate profits have witnessed a fall on weak business spending and exports.

Federal spending exceeded revenues by USD53 billion in May, the Treasury Department said in a monthly update Friday. Over the past year, the deficit totaled USD479 billion, up 16 percent from a year earlier. Weak government tax revenue remains the bedrock for the deficit. Analysts polled by Reuters had expected a USD60 billion deficit for last month.

In the past 12 months ended May, the budget deficit represented 2.6 percent of the country’s economic output, down 2.8 percent in the 12 months through April. The longer-term trends show a rising deficit. Revenues over the past year climbed just three percent compared to the 12 months through May 2015. Earlier in the current economic expansion, revenues routinely grew above six percent.

Meanwhile, government spending surged 4.6 percent in the last one year, compared to May 2015. However, deficit, in dollar terms rose 15.8 percent in the previous year compared to the 12 months ending May 2015.

Moreover, receipts last month totaled USD225 billion, a six percent increase from May 2015, while outlays stood at USD277 billion, a seven percent decline from the same month a year ago.