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Economic Report: U.S. budget deficit halved in fiscal 2022 as receipts surge, COVID spending fades

The numbers: The U.S. federal budget deficit fell to $1.37 trillion in the just-ended fiscal year, the Treasury Department said Friday, half the amount of last year’s shortfall.

Key details: The Treasury said the deficit fell by $1.4 trillion in fiscal 2022, the largest one-year decrease on record. Surging tax receipts totaling $4.9 trillion helped cut the deficit, as did falling outlays.

Spending was $6.3 trillion for the fiscal year, a drop of 8.1%. That partly reflects reductions in COVID-related spending.

Big picture: Treasury Secretary Janet Yellen said in a statement that the report “provides further evidence of our historic economic recovery, driven by our vaccination effort and the American Rescue Plan.”

The deficit largely matched an earlier projection by the Congressional Budget Office. Commenting on the CBO report, the head of the Committee for a Responsible Federal Budget called such a number “most certainly not a cause for celebration” and said it was expected that the shortfall would improve as COVID borrowing ran off and the economy improved.

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