The numbers: The U.S. federal government ran a budget deficit of $145.3 billion in November, down from $208.8 billion in the same month last year, the Treasury Department said Thursday.
The October fiscal year-to-date deficit widened though to $429.3 billion from $343.3 billion in the same period last year.
What happened: Receipts in November totaled $220 billion, down only slightly from $225 billion in the same month of last year. Revenue is only down 4% over the first two months of this fiscal year despite the pandemic.
Outlays totaled $365 billion in November, also down from $434 billion in the same month last year.
Spending has risen for farm programs and for the Department of Health and Human Services, the government agency in charge of the response to the pandemic.
Calendar issues that shifted payments between November and December in each of the past two years affected the data.
Big picture: The government continued to spend more than it takes in each month partly in an effort to get the economy over the pandemic. The deficit topped $3 trillion in the fiscal year that ended on Sept. 30. It was the largest deficit as a percentage of gross domestic product since 1945.
The deficit is expected to narrow to $1.69 trillion this fiscal year, according to the Congressional Budget Office.
Federal Reserve Chairman Jerome Powell has told Congress that now is not the time to worry about returning the deficit to a sustainable level, but he indicated there will come a time that spending will have to be lowered and revenues increased.
What are they saying? “We estimate the deficit will total $1.5 trillion for the fiscal year with no new spending plans — clearly, the risks are to a much wider deficit with any fiscal plans,” said T.J. Connelly, head of research at Contingent Macro.
Market reaction: Yields on 10-year Treasury notes TMUBMUSD10Y, 0.910% remain below 1% despite the larger deficits as the Fed has signaled to markets that it expects to keep its policy rate at zero until the end of 2023.
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