April deficit culprit: low revenue

Further, although spending increased to reflect the bank bail-out and the 2009 fiscal stimulus package, the April deficit culprit was revenue, which came at a level lower than would normally be the case, due to reduced filers stemming from a recession-induced smaller workforce. In April, spending rose 17.5% to $287.1 billion, but revenue plunged 34.1% to $266.2 billion.

The federal government has now amassed an $802.3 billion deficit for the current fiscal year, fiscal 2009, en route to an Obama administration-forecast $1.84 trillion deficit; the administration expects the deficit to decline to $1.26 trillion in fiscal 2010. Last year, fiscal 2008, the U.S. government posted a $454.8 billion deficit.

Historically, April is a high revenue month for the federal government, as tax payments typically jump with quarterly filers and others making larger payments to meet tax law requirements by the April 15 federal tax filing deadline. What's more, the federal government last reported an April budget deficit in April 1983, when the economy was recovering from the severe 1982 recession. That slump saw the U.S. unemployment rate soar to 10.8%; the current recession has seen unemployment rise to 8.9%.

Fiscal / Economic Analysis: Even though the April budget stat was basically in-line with the Bloomberg consensus estimate, it still was a bit of a surprise for yours truly. Whisper numbers had made reference to receipts coming in better-than-expected, stemming from a flood of last-minute filers. Revenue did rise, but not at the 50-60% gain level some had anticipated. Further, the April data also suggests additional, widening revisions will be made to this year's forecast $1.84 trillion deficit, but it's best to get May and June data before making a definitive budget trend statement.

Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.