In July, the US federal government has recorded a budget deficit of USD 112.8 billion, consistent with the CBO’s forecast of USD 113 billion. The deficit in July has narrowed from July 2015’s USD 149.2 billion. CBO stated that the deficit would have been USD 8 billion wider as compared to July 2015’s if it had not been for the time-shifting of payments last year.

Moreover, this year, there were fewer business days in July as compared with 2015's. This additionally complicates annual comparisons, said Barclays in a research note. In July 2016, receipts dropped 6.9 percent year-on-year to USD 210 billion. The drop was widespread throughout revenue categories and is expected to have been driven by the calendar effects.

Meanwhile, spending dropped 13.8 percent year-on-year to USD 322.8 billion on a cash basis and USD 324 billion after CBO adjustments. Fewer net payments for student loans program mainly led to the drop in adjusted outlays. The cost of student loan and loan guarantees were upwardly revised in 2015 by USD 9 billion. However, there were no revisions made in 2016, thereby resulting in an effective drop in outlays.

The federal government’s spending on social security was up by USD 2 billion, giving a partial offset. The 12-month running total for the federal deficit is currently at USD 487.2 billion.

“We continue to expect a total deficit of USD 550bn for FY 2016,” added Barclays.