WASHINGTON — The U.S. posted its smallest March budget deficit in 14 years as an improving labor market boosted tax receipts and federal government spending declined from a year earlier.
Spending exceeded revenue by $36.9 billion last month, compared with a $106.5 billion deficit in March 2013, the Treasury Department said Thursday in Washington. The median estimate in a Bloomberg survey of 18 economists called for a $36 billion shortfall.
“The economy is growing, so the tax receipts are up,” said Paul Edelstein, director of U.S. financial economics at IHS Global Insight in Lexington, Mass. “We’ve also cut back significantly on expenditures.”
A report last week showed the number of employees on company payrolls surpassed the pre-recession peak for the first time in March, a sign progress in the job market will help propel tax receipts into the Treasury.
Corporate tax receipts may get a boost from a pickup in the pace of growth. Strength in the U.S. this year and next will help the world economy withstand weaker recoveries in emerging markets, an April 8 report from the International Monetary Fund showed.
Thursday’s Treasury report showed revenue increased 16 percent to $215.8 billion last month from $186 billion in March 2013. Spending totaled $252.7 billion, down 13.6 percent from $292.5 billion a year ago, today’s report showed.
Because March 1 fell on a weekend, certain payments usually made in March were shifted to the month earlier. Without those shifts in payments, and excluding some prepayments that lowered collections in 2013, the March deficit would have been $34 billion smaller than a year ago, the Congressional Budget Office said on April 8.
Federal government spending cuts, known as sequestration, and higher revenue, helped the U.S. win praise from the IMF as the world’s largest economy cut the deficit last fiscal year by more than a half since 2009.
That’s a change from the tone at the last IMF meeting in October, when there was a risk of U.S. default tied to a federal government shutdown. The contingency plans international officials started to draft as the U.S. approached the debt ceiling turned out not to be necessary as lawmakers reached a fiscal agreement on Oct. 16, less than 24 hours from when the Treasury said it would exhaust borrowing authority.
A subsequent budget agreement “substantially reduced near- term uncertainties,” the IMF said in a Fiscal Monitor report released Wednesday. “But a comprehensive and medium-term plan to place the debt and public finances on a sustainable basis is still lacking.”