The Congressional Budget Office estimated the deficit last month clocked in at $737 billion, which would be by far the highest tally for any month in four decades of data kept by the Treasury Department.
Since the fiscal year began Oct. 1, the agency said in a report issued Friday, red ink has stacked up to an estimated $1.48 trillion for the past seven months, or $949 billion more than the deficit for the same period last year.
The April shortfall, if confirmed by Treasury’s final reading next week, would far eclipse the current record of $235 billion in one month, which occurred just a few months ago in February.
Last month’s damage was compounded by a delay in the annual tax filing deadline, which is usually April 15.
Typically it’s a surplus month, with the budget finishing $160 billion in the black a year ago at this time, for example. But the deadline has been pushed back to July this year to accommodate households and businesses negatively impacted by the economic shutdown.
The CBO predicts the deficit for the fiscal year ending Sept. 30 is estimated to hit $3.7 trillion, which would be more than twice the previous record of $1.4 trillion in fiscal 2009, at the height of the Great Recession. As a share of the U.S. economy, which is a more meaningful comparison over long periods of time, at nearly 18 percent the budget gap would dwarf anything seen since World War II.
The CBO attributed the huge deficit increase to the economic disruption caused by the pandemic and by the federal government’s response to it, including several pieces of legislation whose deficit impact is estimated at roughly $2.4 trillion over a decade. Most of that shortfall will occur this fiscal year.
And that’s before further legislation planned by Speaker Nancy Pelosi, which is expected to easily top $1 trillion.
In part because the federal government extended tax filing deadlines but also because of the plunge in economic activity, revenue over the past seven months is 10 percent lower than during the same period last year. April revenue alone was down $296 billion, or 55 percent.
Spending was 29 percent higher through April than during the same period last year. During that month alone, spending was two-and-a-half times higher than the previous year’s output, totaling nearly $1 trillion just for April.
Driving the higher spending were tax rebates sent out by Treasury last month under the $2 trillion aid bill enacted March 27, as well as big expansions of Medicare and other payments to hospitals, aid to states and localities, and unemployment insurance.
Last month unemployment insurance benefits swelled to $49 billion; last April’s figure was just $3 billion, according to the CBO. The big March aid bill created a new temporary $600 weekly add-on to regular benefits, while jobless claims swelled by over 20 million in April alone, according to Bureau of Labor Statistics data.