The numbers: The U.S. federal budget deficit has narrowed by a record amount in the fiscal-year-to-date measurement, the U.S. Treasury Department said Wednesday.
For the first ten months of the fiscal year, which ends Sept. 30, the deficit was $726 billion, down sharply from $2.5 trillion in the same period last year. That’s a record $1.8 trillion narrowing.
In July alone, the deficit narrowed to $211 billion in July, down from $302 billion in the same month a year ago.
Key details: For the first ten months of the 2022 fiscal year, receipts were $787 billion higher than over the same period last year, while outlays were down by $1 trillion.
In July, receipts rose 3% while outlays fell 15%.
Big picture: Tax receipts were significantly stronger than expected in April, putting the U.S. in a strong fiscal position, said Tom Simons, economist at Jefferies and Co, in a note to clients.
The sharp decline in government spending is having a drag on economic growth though. Economists at The Hutchins Center on Fiscal and Monetary Policy estimate that the “fiscal cliff” has reduced gross domestic product by 3.8% over the past year.