Updated: 12 February 2013 11:56 pm EST
Econintersect: The U.S. Treasury has announced a budget surplus for January, the first time 
since before the Great Financial Crisis (GFC). The government took in $3 billion more than it spent in January. According to Reuters, the concensus had been for a $2 billion shortfall. In January of 2012 the deficit was $21 billion. The deficit for the first four months of fiscal 2013, which started 01 October 2012, is $290 billion. For the same peiod in fiscal 2012 the deficit was $340 billion.
The major reason for the January surplus was the reinstitution of the full FICA tax. According to Reuters that amount to $9 billion more government revenue. Since that had no impact of government spending it amounts to a 0.06% (0.7% over one year) reduction in GDP. Almost all of that $9 billion would have otherwise remained in consumers’ hands and almost entirely spent into the economy. If there is any multiplier affect for such spending the GDP impact would be even greater.
The deficit for 2012 totaled over $1 trillion ($1.089 trillion). Just a week ago the CBO issued a forecast for 2013 with a projected deficit 22% below 2012 at $845 billion. That projection assumes current law stays in place with spending cuts occurring through sequestration. These automatic cuts may be modified by congressional action and the deficit reduction would then be expected to be less.
Under all scenarios the deficit is expected to come in under $1 trillion for 2013, the first time since the next to last G.W. Bush fiscal year (2008) when the deficit was $459 billion. Since then the last Bush fiscal year and the first three for Obama have averaged more than $1.250 trillion per year.
Sources:
- U.S. posts $3 billion budget surplus for January (Reuters, 12 February 2012)
- CBO: Expects Slow Growth in 2013 (GEI News, 08 February 2013)
- CBO: Outlook for Deficits Collapsing (GEI News, 06 February 2013)
