Military spending continued to grow at a fast clip in December. A patriot missile on display.
The numbers: The federal government ran a budget deficit of $13.3 billion in December, a drop of just 2% from a year earlier, the Treasury Department said Monday. This was also slightly below the $15 billion deficit estimated last week by the Congressional Budget Office.
What happened: Spending for the month was $349.1 billion while the government brought in $335.8 billion. Outlays rose for defense programs and veterans affairs. These were partially offset by reductions in spending on education and homeland security.
Big picture: For the fiscal year through December, the deficit is up 12% to $356.6 billion. The CBO has forecast a budget deficit above $1 trillion in fiscal 2020, the first time in eight years. The deficit for fiscal 2019 came in just under $1 trillion at $984 billion.
Economists are not accustomed to the government running large budget deficits at the same time the economy is growing at a moderate pace and the unemployment rate is at historic lows. There is some concern for how much fiscal policy can respond in the next economic downturn.
Market reaction: Financial markets are taking the larger fiscal deficits in stride. Stocks were higher in afternoon trading with the S&P 500 SPX, +0.58% index up 16.49 points. The yield on the 10-year Treasury note TMUBMUSD10Y, +1.49% was up almost 2 basis points to 1.840%.