WASHINGTON – Six months ago, global finance officials meeting in Washington berated the U.S. for failing to put its fiscal house in order.
This time, the critics were silent.
The Congressional Budget Office is projecting the 2014 deficit will be the lowest in six years and down more than 60 percent from the record $1.4 trillion in 2009.
With the annual April 15 tax filing deadline looming, the U.S. has received about $80 billion more in income taxes this fiscal year than it had 12 months earlier.
The Treasury’s coffers are swelling as the almost five-year economic expansion gains momentum, generating more corporate and personal income-tax revenue and reducing spending on social services.
Stronger growth, in turn, will depend less on government spending to fuel growth than it has in the past.
Without fiscal stimulus, we’ll see over the next year or two if the economy is really standing on its own two feet, said Ira Jersey, a fixed-income and interest-rate strategist at Credit Suisse Group in New York. We suspect it is. This means further improvement of the deficit over the next few years.
The latest evidence of fiscal health came last week, when the Treasury Department reported a deficit of $36.9 billion, the smallest for that month in 14 years.
Revenue increased 16 percent to $215.8 billion from $186 billion in March 2013. Spending totaled $252.7 billion, down 13.6 percent.
Corporate tax revenue may climb further as accelerating growth and declining unemployment boost sales and earnings. The International Monetary Fund, in a report last week, forecast a U.S. expansion of 2.8 percent this year and 3 percent in 2015, compared with 1.9 percent last year.
The U.S. is strengthening as other developed economies struggle to grow.
The 18-country euro area will expand 1.2 percent this year and 1.5 percent in 2015, according to IMF projections. Japan, the world’s third-largest economy, will gain 1.4 percent in 2014 followed by 1 percent the year after.
The United States recovery continues to gain strength, while other countries continue to adjust and reform, Treasury Secretary Jacob Lew said Friday during meetings in Washington held by the IMF and World Bank.