The U.S. posted a record December budget surplus as higher payroll taxes, payments from Fannie Mae and Freddie Mac, and a declining unemployment rate helped improve the government’s finances.
Revenue exceeded spending by $53.2 billion last month, compared with a $1.19 billion deficit in December 2012, the Treasury Department said today in Washington. The median estimate in a Bloomberg survey of 29 economists was for a $44 billion surplus, the same as the Congressional Budget Office’s prediction.
The 1.2 percentage-points drop in the nation’s jobless rate to 6.7 percent in 2013 was the steepest calendar-year decline since 1983. The strengthening economy and swelling tax revenue cut the country’s deficit as a share of gross domestic product by more than half to $680.3 billion in the fiscal year ended Sept. 30 from a record $1.42 trillion in 2009.
“We continue to see economic conditions improve, which is being reflected in the budget deficits continuing to narrow,” said Michael Brown, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina.
The yield on the benchmark 10-year Treasury note fell three basis points to 2.82 percent at 2:17 p.m. in New York, touching the lowest level in a month.
Today’s report showed revenue increased to $283.2 billion last month from $269.5 billion in December 2012. Spending totaled $230 billion compared with $270.7 billion a year earlier, it showed.
Narrower Deficits
The deficit totaled $173.6 billion in the first three months of fiscal 2014, compared with a $293.3 billion shortfall from October through December 2012, according to the report.
Payments to the Treasury from Fannie Mae and Freddie Mac were about $34 billion more last month than they were a year earlier, according to the report.
Fannie Mae and Freddie Mac have taken $187.5 billion in U.S. aid since they were taken into conservatorship in 2008. They’ve returned $185.2 billion, which is counted as a return on the nearly 80 percent stakes the government holds, not as repayment.
Employers added 74,000 workers in December, the smallest gain since January 2011, a Labor Department report showed Jan. 10. Economists say the coldest December since 2009 and above-normal snowfall restrained hiring. Job growth in 2013 totaled 2.19 million, the third straight year exceeding 2 million and sending unemployment to the lowest level since October 2008.
Spending Debate
While Congress agreed to set the government spending through Sept. 30 at $1.01 trillion, they still must pass legalization this week detailing funding government operations, including the military and health-care services. Senators are also at a stalemate over renewing U.S. unemployment benefits for the long-term jobless until offsetting cuts are found elsewhere in the budget.
Republicans are also yet to determine what they want in exchange for agreeing to raise the debt ceiling, which has been suspended through Feb. 7. Treasury Secretary Jacob J. Lew said the U.S. will exhaust its borrowing authority shortly after that and urged Congress to raise the borrowing limit as soon as possible.
A previous congressional agreement led to higher payroll taxes in January 2013 and spending cuts known as sequestration that kicked in in March.
“The deficit is going down, will continue to go down as percentage of GDP and in nominal terms through about 2018, 2019 under current forecasts,” said Stan Collender, executive vice president at Qorvis/MSLGROUP in Washington and a former congressional appropriations aide. “It will essentially cease to be much of an economic issue over the next five years.”