US Economy Suffers A Shocking 25.1% Deficit In The First Two Months Into The Budget Year

 

 

The government of the USA has experienced a discrepancy that is almost 25.1% higher than the last year in the first two months of the current budget year. As per reports, the cause behind the deficit is the soaring expenses for the Coronavirus pandemic as well as the huge plunge in the tax revenues.

As per the reports presented on Thursday by the Treasury Department of the USA, the country has experienced a total of $429.3 billion deficit in just two months into the budget year. This is a huge drop from last year’s October-November period, which was $343.3 billion.

In the current budget year, the country has witnessed a huge deficit in the balance of what the government collects and what it exhausts. The expenditures rose 8.9% to $886.6 billion while the tax revenues declined at an alarming 2.9% to $457.3 billion.

The current budget year started on October 1st and the expenditure of the initial two months has already set a record in history. The shortfall of the tax revenue has also created an all time record due to its rapid decline.

The shortfall in the previous budget year that closed on September 30th was a shocking 3.1 trillion. This was caused by the more than trillion dollars expenses that Congress passed in the spring to deal with the severe economic decline caused by the worldwide pandemic. The economy witnessed a huge drop in tax revenues as millions of citizens lost their jobs in the recession.

Congress is still deciding upon a second relief package of nearly $ 1 trillion, which would fuel this year’s financial losses. Excluding further relief measures, the Congressional Budget Office has estimated that this year the US economy will experience a total of $1.8 trillion and it will be over $1 trillion each year through 2030.

According to Nancy Vanden Houten with Oxford Economics, the future shortfall of the current budget year ‘depends heavily on the course of the pandemic, the economic recovery and whether additional stimulus measures are passed.’

She also expressed her fears about Congress’s decision of approving an additional $1 trillion to deal with the economic downfall. She said that the shortfall will be up to $2 trillion for this budget year if Congress approves the deal.

But the last year’s $3.1 trillion deficit was still less than the record-breaking 2009 devastating $1.4 trillion shortfalls. At that time the US economy was struggling to overcome the disturbing recession caused by the 2008 financial crisis.

The total deficit in the US in November was almost $145.3 billion.