U.S. budget deficit jumps to $163 billion in January as Washington pumps more stimulus into the economy

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The U.S. federal budget deficit increased sharply in January to $163 billion as Washington funneled more financial aid to families and unemployed workers to cushion the latest blow from the coronavirus pandemic. The deficit increased last month from a $33 billion budget gap in the same month of 2020, the Treasury Department said Wednesday. The budget gap in the first four months of the current fiscal year was 89% higher compared to a year earlier – $736 billion vs. $347 billion.

President Donald Trump took bold and swift action to protect public health from the effects of the unprecedented pandemic, signing into law four major pieces of legislation that address the health and economic effects of COVID-19. Through these laws, the Trump Administration has provided assistance to American workers and families, small businesses, and state, local, and tribal governments, and preserved jobs for American industry. Primarily due to these efforts, the deficit in FY 2020 was $3.1 trillion-$2.0 trillion more than forecast in the FY 2021 President’s Budget (Budget).

Under President Trump’s leadership, the economy has begun an incredible comeback. The unemployment rate has declined each month since its peak in April, falling to 7.9 percent in September. In the last five months, 52 percent of the jobs lost during the pandemic have been recovered and the United States has gained more than 11.4 million jobs. Employment will continue to improve as states reopen businesses and lift social distancing orders.

Year-end data from the September 2020 Monthly Treasury Statement of Receipts and Outlays of the United States Government show that the deficit for FY 2020 was $3.1 trillion; $2.1 trillion higher than the prior year’s deficit. The FY 2020 deficit was $2.0 trillion higher than the estimate of $1.1 trillion in the FY 2021 Budget published in February.

Total Federal borrowing from the public increased by $4.216 trillion during FY 2020 to $21.019 trillion. The increase in borrowing included $3.132 trillion in borrowing to finance the deficit as well as $1.084 trillion in net borrowing related to other transactions such as changes in cash balances and net disbursements for Federal credit programs. Below are explanations of the differences between estimates in the Budget and the year-end actual amounts, for receipts and outlays.