May 8, 2012

Federal Government Posts First Monthly Budget Surplus In Three Years

It’s a bit misleading, but the federal government had a $58 billion surplus in April according to the Congressional Budget Office (CBO). The surplus is due to tax season, which results in an April surplus most years even if the yearly numbers are still deep in the red. It’s notable because there hasn’t been a surplus month in three years and it could be a sign of an improving economy.

The improved numbers are attributed to a 10 percent increase in tax revenue. The month of April coincides with tax season which typically results in a yearly surplus, but hasn’t happened since the 2008 financial crisis when tax revenue fell.

“It is a clear signal that the government’s fiscal situation is finally moving definitively in the right direction,” said Mark Zandi who is the chief economist for Moody’s Analytics.

Next month’s report will likely show a budget deficit, but the small surplus is an important milestone in the nation’s struggle to fend of a future debt crisis.

I’m not so sure I would get too excited yet.

dks

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Please share your thoughts

 

  • MYMY

    If it was only due to tax collections in mid April this year, what about the two prior years?

    • http://leftcall.com/ David K. Sutton

      Apparently it was a combination of increased tax receipts as well as reduced spending, at least compared to 2011.