US December deficit lowest in five years

The US government budget deficit contracted to its best December monthly result in five years, on higher revenue, lower spending and calendar-driven shifts in some payments.

The shortfall last month was down almost completely to $260 million from $86 billion in December 2011, the treasury department data issued today in Washington showed. Through the first three months of this fiscal year, the deficit was 9.1 per cent less than the same period last year.

Bloomberg quoted Thomas Simons, a government debt economist at Jefferies Group Inc in New York as saying that December had been a pretty solid month mostly due to a bit of tax-related activity that was shifted into December due to concerns over the fiscal cliff and anticipated higher tax rates in 2013.

He added, going forward fairly substantial deficits would be seen this year and in coming years without any significant change to the spending policy.

The monthly budget surplus of the US stood at $48.3 billion in December 2007.

The US reached its $16.4 trillion debt limit on 31 December and treasury secretary Timothy Geithner said on 26 December that he could create about $200 billion of ''headroom'' for avoiding default with the use of extraordinary measures.