Deficit Up in July, but ’96 Decline Expected

The federal budget deficit climbed to $102.1 billion in July, but it remained on track toward the fourth straight annual decline and possibly the smallest imbalance in 15 years.

The Treasury Department said Wednesday that the imbalance during the first 10 months of fiscal 1996 was 25.6% less than the $137.2 billion a year earlier.

The Clinton administration forecasts the deficit will be $116.8 billion when the fiscal year ends Sept. 30. If so, it would be the lowest since government red ink totaled $79 billion in fiscal 1981.

The last annual surplus, of $3.2 billion, was in fiscal 1969.

The Treasury said the deficit grew by $27.1 billion in July, double the $13.6 billion a year earlier, when the government received a one-time $7-billion payment for broadcast spectrum and license sales. Also, some payments normally made in July were pushed up to late June to avoid a weekend delay.

Receipts totaled $103.8 billion in July, up from $92.7 billion a year earlier. But expenditures totaled $130.9 billion, compared with $106.3 billion in July 1995. The deficit is the difference between income and outlays.

The government had a $34.1-billion surplus in June, due in part to the deadline for filing quarterly individual and corporate tax returns. Also, the Treasury had shifted some payments due on June 1 to May 31 to avoid another weekend delay.

Although the government is likely to experience another monthly deficit in August, it traditionally posts a surplus in September, the next deadline for quarterly tax returns.

The federal deficit hit a record $290.4 billion in fiscal 1992, then slipped to $255.1 billion the following year, $203.2 billion in fiscal 1994 and $163.9 billion last year.

But even with the size of the annual deficits going down, each year’s imbalance adds to the total national debt, the sum of all the annual deficits, plus borrowings from government trust funds.

The national debt currently stands at $5.1 trillion.

Also Wednesday, the Labor Department reported that the prices U.S. businesses paid for imported goods fell for the third consecutive month in July, even as petroleum prices rose.

Prices for imported goods fell 0.2% last month after declining a revised 1.1% in June. Petroleum import prices rose 1.5% in July after falling a revised 6.5%, the government said.

The last time all import prices fell three months in a row was between November 1992 and January 1993.

Excluding petroleum, import prices also decreased 0.4% in July, also the third consecutive monthly decline.

Overall U.S. inflation barely budged last month. The Labor Department recently said that consumer prices rose 0.3% during July, whereas producer prices showed no change.

With inflation showing few signs of accelerating, the Federal Reserve Board on Tuesday chose to leave the overnight bank lending rate unchanged at 5.25%.