The federal government incurred the biggest monthly budget deficit in history last month as spending on programmes to combat the coronavirus recession exploded while millions of job losses cut into tax revenues.
The Treasury Department reported that the deficit hit $864 billion in June while for the first nine months of this budget year, which began October 1, the deficit totals $2.74 trillion.
That puts the country well on the way to hitting the $3.7 trillion deficit for the whole year that has been forecast by the Congressional Budget Office, reports AP.
That total would surpass the previous annual record of $1.4 trillion set in 2009 when the government was spending heavily to lift the country out of the recession caused by the 2008 financial crisis.
The Trump administration is predicting that the economy will make a comeback in the second half of this year but many private forecasters are concerned that a resurgence of virus cases could make consumers too fearful to resume spending, which drives 70 percent of the economy.
Congress, which has already approved more than $3 trillion in a series of rescue packages, is scheduled to debate another support effort when it returns from recess on June 20. Democrats are pushing for an extension of the expanded unemployment benefits which will soon run out.
“The risk is that the deficit will be larger due to additional stimulus but given the congressional timetable, the impact of the next package will likely be skewed to fiscal 2021, which starts Oct 1,” Nancy Vanden Houten, senior economist at Oxford Economics said.