WASHINGTON (AP) — The U.S. government ran a much smaller deficit through the first two months of the budget year than the same period last year, signaling further improvement in the nation's finances.
The November deficit — the gap between what the government takes in and what it spends — totaled $135.2 billion, the Treasury Department said Wednesday. That's 21.4 percent lower than November 2012. And through the first two months of the budget year the deficit totaled $226.8 billion, or 22.7 percent lower than the same period a year ago. The budget year begins on Oct. 1.
Higher tax rates and a better economy have boosted revenue. At the same time, spending has slowed. Those trends helped shrink the annual deficit last year to $680 billion, the lowest deficit in five years. Private economists predict the annual deficit this year will fall further, to around $600 billion.
The government ran annual deficits of more than $1 trillion in the previous four years, including an all-time high of $1.4 trillion in the 2009 budget year. The Great Recession led to a drop in tax revenue and an increase in emergency spending, such as unemployment benefits.
The economy has gradually improved since the recession ended four years ago. And hiring has accelerated in the past four months. As more people find jobs, tax revenue rises and the deficit shrinks.
Through the first two months of the budget year revenue has increased 10.2 percent to $361.8 billion compared with the same period last year. At the same time, spending in those months has fallen 4.7 percent to $608.2 billion.
House and Senate negotiators reached agreement on a budget deal on Tuesday that would avoid another government shutdown in January and bring some stability to the budget process for the next two years. The deal must be approved by the full House and Senate.