JAKARTA (TheInsiderStories) – The United States (US) posted budget deficit of US$600 billion in March of 2021 as the stimulus aid package continues to grow to deal with the pandemic, the secretary of treasury office reported. In the same month of last year, the deficit was $119 billion, including state revenues of $268 billion and expenditures of $927 billion.
As a result, the deficit for the first six months of 2021 also swelled to a record high of $1.70 trillion, higher than a year ago of $743 billion. The office reported, the 13 percent increase in state revenue was supported by an increase in taxes withheld from individual residents.
In March, total revenues recorded $ 1.70 trillion and total direct payments reached of $487 billion, including from the year-end stimulus package endorsed by the previous government. Unfortunately, the government spending also increased to $3.14 trillion due to direct payments under the American Rescue Plan Act passed last month.
As known, US government has issued a stimulus package of more than $1.9 trillion to help the economy recovery from the pandemic. The Federal Reserve (Fed) has forecasted the US gross domestic product (GDP) would surge by 6.5 percent in 2021, the fastest rate since the 1980s. That is a 2.3 percentage-point improvement in 2021′ outlook from their previous forecasts end of last year.
Chairman of the Fed, Jerome Powell, said US economy is expected to grow by 6.5 percent in 2021, and 3.3 percent in 2022, up from previous estimates of 4.2 percent and 3.2 percent, respectively. The Bank’ efforts have been helped by a wave of unprecedented pandemic fiscal relief measures rolled out by the President Joe Biden’ administration.
The US$1.9 trillion American Rescue Plan, together with the faster pace of vaccine roll outs have added fuel to the recovery, he adds. But, he reminded, the improving economic backdrop has sparked inflation and US’ bond yields into life, stoking speculation over whether the Fed will have to tighten policy sooner than expected.
The minutes also showed, the Fed interest rate outlook for 2021 through 2023 was 0.1 percent. The unchanged guidance on interest rates comes even as the central bank upped its outlook on growth and inflation in the wake of an improving economic backdrop amid a boost from stimulus and the faster pace of vaccine rollouts.
The pace of inflation is forecast to improve to 2.4 percent in 2021, 2.0 percent in 2022, compared with prior estimates of 1.8 percent and 1.9 percent, respectively. In 2023, said Powell, the inflation is projected to reach the 2.1 percent of the target from previously at 2 percent, though the central bank has reiterated that it would let inflation run above target for some time.
The Fed also justified its accommodative stance as the unemployment rate at 6.2 percent remains above pre-pandemic levels. The unemployment rate for the 2021 is expected to come in at 4.5 percent, down from initial projection at 5 percent, and fall further to 3.9 percent in 2022 from previous estimate of 4.2 percent and to improve further to 3.5 percent in 2023 from a prior estimate of 3.7 percent.
“We are having diverging recoveries here, as we did after the last crisis. In this case the US recovery is leading the global recovery,” concluded by Powell.
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