Investors received another slice of good news Monday about the U.S. economy: The federal budget deficit for August totaled a smaller than expected $90.5 billion thanks to rising government revenues, the Treasury Department announced.

Year over year, revenues rose 12.7% to $164.0 billion from $145.5 billion in August 2009, while spending rose 2.1% to $254.5 billion from $249.1 billion in August 2009. August's increase in revenue -- a substantial jump from July's 2.7% year-over-year rise -- also represents the fourth consecutive month that revenue increased on compared to 2009, providing further evidence that the government's "revenue recession" has ended.

Economists surveyed by Bloomberg had forecast a $95 billion deficit for August, after a $165 billion deficit in July. The U.S. government posted a $103.6 billion deficit in August 2009. For the first 11 months of this fiscal year, the deficit totaled $1.26 trillion, compared to $1.38 trillion for the same period last year.

Corporate Revenue Rises Again

Corporate revenues also continued to trend higher: In the last 11 months, corporate tax receipts were up 30.2% to $142.4 billion.

Individual income tax revenues, weighed down by the large number of layoffs since 2007, and by tepid hiring in 2010, are not fairing as well: They were down 2.7% in the last 11 months, compared to a year ago.

The Obama administration has forecast a record $1.47 trillion deficit for the current fiscal year, which began Oct. 1, 2009. The U.S. government also posted a record $1.42 trillion deficit in fiscal 2009, following a $454.8 billion deficit in fiscal 2008.

The Congressional Budget Office has forecast a $1.34 trillion deficit for fiscal 2010 and a $1.07 trillion for fiscal 2011.

A Slowly Improving Budget and Economy

Although the 9.6% U.S. unemployment rate doesn't reflect it, August's deficit report points to a modestly improving budget picture -- one that reflects a slowly recovering U.S. economy. Higher international sales are boosting revenue and earnings for many U.S. corporations, which shows up in their increased their payments to the Treasury.

If that trend continues, corporate tax revenues will serve as a modest aid for members of Congressional in their budget-balancing task. All other factors being equal, it's easier to match spending with income during a period of rising revenue in an economic expansion than it is when conditions are the opposite.

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The deficit is getting lower? This is terrible news for conservatives!

September 14 2010 at 7:36 AM Report abuse rate up rate down Reply

The Democrats have gotten the job done, in record time (2 years)! With good laws now in place, the Conservatives (Republicans, or Libertarians) can take the ball in November. I cannot see any more work for Democrats to do, at present. We have strong confirmation in the financial sector. That's where this train initially left the tracks. The tracks are laid, new warning signs are posted and well, it's time to let the choo-choo start chugging up the rails. Another cycle in American economic warfare has ended! Congratulations and Thanks to the outgoing Democrats, for seeing us through, from start to finish... Now, I'd like to see some Conservative government, for the next 6 years.

September 14 2010 at 4:30 AM Report abuse +1 rate up rate down Reply
1 reply to MSmailbox's comment

Then grab you ankles and get in the mood.

September 14 2010 at 7:34 AM Report abuse rate up rate down Reply

You also have to remember that tons of low interest T Bills had been issued to replace old high interest T Bills as well as bonds. So , we are paying less and less in interest to Mt.Debt. The longer the low interst rate stick, the better off we will be as we will be better able to handle the trillions of dollars in debt still paying high interest and drawing closer and closer to maturities. We still have trillions to go..and possibly years to go. In a short order, those trillions in debt will be easier to manage by paying ultra low interest .

September 13 2010 at 6:54 PM Report abuse +2 rate up rate down Reply
1 reply to Gumby's comment

When government debt, personal debt is over a 100 trillion dollars the simplicity of using US Treasury''s pales in the real issue. We have 17% plus real unemployment, small businesses stifled with Obamanism's and can't find a clear direction for growth. If we had a normal recovery from normal free enterprise market fluctuations then you may have a point. However, we are in way over our heads and are taking on water.

September 13 2010 at 8:22 PM Report abuse -2 rate up rate down Reply