US budget deficit falls $360 bn in 2021 to $2.8 tn: Govt

The US budget deficit narrowed in the past year as the economy recovered from the Covid-19 pandemic, falling $360 billion to $2.8 trillion, the government reported Friday.

The result for the fiscal year ended September 30 was far better than expected, and reflected a more than $600 billion increase in tax revenues as the economy was able to restart following the pandemic shutdowns, according to government data.

"Today's joint budget statement is further evidence that America's economy is in the midst of a recovery," Treasury Secretary Janet Yellen said, crediting the huge American Rescue Plan stimulus package approved early this year for the deficit's shrinking.

Government outlays increased $266 billion to $6.8 trillion in the fiscal year just ended, partly due to ongoing spending from other massive stimulus bills passed in 2020, when the pandemic was at its worst.

But Yellen cautioned that "while the nation's economic recovery is stronger than those of other wealthy nations, it is still fragile."

She said passing additional social and infrastructure spending measures proposed by President Joe Biden "will grow the economy, help workers and families and strengthen our nation's long-term fiscal outlook."

Total federal borrowing increased by $1.3 trillion during to $22.3 trillion, the report said.