The deficit grew to a higher-than-expected $150.4 billion in November as government spending increased for the month.For months, the nation's finances have been staggering two steps forward, one step back. November brought a modest step back as higher spending pushed the budget deficit to a worse-than-expected $150.4 billion, the U.S. Treasury Department announced Friday.

That's a jump of 25% from the same month a year ago, when the deficit totaled $120.3 billion, an increase of 7% from the deficit in October and also higher than the $140 billion that a Bloomberg survey of analysts had forecast.

But it's not as bad as it looks at first glance: As economists are quick to point out, a top-line comparison of this November's budget to that of November 2009 doesn't tell the entire story. Last year, a shift in payments for Social Security and Medicare, among other programs, to Oct. 30, 2009 from Nov. 1, 2009, which fell on a Sunday, artificially lowered November 2009's spending, making November 2010 look worse by comparison.

Spending Surges

The primary culprit of the worse-than-expected deficit was increased government spending, which surged 17.9% to $299.4 billion for the month, outpacing substantial revenue growth.

In November, revenue rose 11.5% to $148.96 billion, marking a reversal in the revenue growth rate, which had slowed for three consecutive months. Year-over-year government revenue increased only 7.9% in October. Still, the accelerating revenue growth represents a potential long-term 'ray of light' in the short-term darkness of the November report.

Further, November's strong rebound to an 11.5% growth rate -- although economists are careful to point out that one month is not nearly long enough to conclude a trend -- is consistent with the stronger U.S. GDP growth that the economy recorded in the third quarter and that probably continued in to the fourth quarter.

The Congressional Budget Office has forecast a $1.067 trillion deficit for the current year, fiscal 2011, or about 7% of U.S. gross domestic product. The U.S. government posted a $1.29 trillion deficit for fiscal 2010, a record $1.42 trillion deficit in fiscal 2009, and a $454.8 billion deficit in fiscal 2008.

Little Impact on Markets

November's budget deficit data had little impact Friday on the market for U.S. Treasuries, at least initially, with the 10-year note virtually unchanged at 3.28%.

That 10-year rate is still comparatively low, even after growing more than a half point in the past two months, indicating that institutional investors -- from pension funds to foreign governments -- remain confident that the world's largest economy will be able to service its high national debt.

U.S. stock markets were also unmoved by the November data, at least initially, with the Dow Jones Industrial Average up approximately 30 points to 11,401 -- essentially flat from where it was before the report's release.

November Report: Some Qualified Good News

At its core, November's budget report represents qualified good news: the larger increase in year-over-year revenue compared to October reflects a U.S. economy that saw revved-up third-quarter growth after a second-quarter slowdown. And faster GDP growth is just what the U.S. needs in the quarters and years ahead to create more jobs and begin to chip away at the nation's large job deficit of more than 15 million jobs.

Further, if the trend of stronger U.S. GDP growth continues and the U.S. economic expansion progresses, that will also make policymakers' task of balancing the budget easier. All other factors being equal, it's easier to balance a budget during a period of rising revenue in an economic expansion than during a time of shrinking revenue in a recession.

However, the good news is qualified because while the stronger revenue growth will help cut the deficit, it's unlikely to be enough to balance the budget -- assuming the U.S. economy doesn't expand at hyper growth rates of more than 8% per year. The reason? Entitlement spending -- including outlays for Social Security and Medicare, as Baby Boom citizens retire -- is set to start pushing the deficit back up again in 2015.

Given that demographic reality, balancing the budget after 2015 will most likely require entitlement reform, other program cuts and some type of tax increase or new revenue stream, such as a value-added tax.

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Samir semaan

the national debt is growing day after day and the reason american people are unemployed and the housing mortguage meltdown still continue and it will continue for the next four months because construction are at its lowest level and many homes are out there for people to shop but everybody for the last two years are holding the cash and are not spending now they can spend to renovate their homes or buy a new home.Whatever the case you don't want hinder the growth fix the economy first and after hold to a fiscal budget.

December 12 2010 at 11:54 PM Report abuse rate up rate down Reply
bgrump5072000

would anyone expect anything different thats the only thing our government does well is spend other peoples money without knowing and seemingly not caring or just let someone else worry about 4 or 5 years down the road they never have any clue how their gonna pay for anything i know where we can spend some money and i know how to pay for it we need to get a private citizen group to watchdog and go through all these lawmakers job related spending and we can use money we get from cutting their pensions and sick and vaca time and 10 percent salary cut until they are held responsible for their actions it will just continue they need to be brought back to reality and not have it so easy then maybe theyll do the right things and maybe learn how to spend correctly and look at the consequences if its not done right instead of just doing something and deal with it later then they need to go through the governments pay to job scale useless jobs for friends wasted inhouse spending then continue through the government funded programs such as welfare etc and find and eliminate the fraud the money saved by fraud will more than pay for the jobs to watchdog these programs states need to do the same also starting with the top and working outward it will all pay for itself and more if states dont do it they get no fed funds and calif and newyork have the biggest criminal inhouse spending BUT DO YOU THINK WE WILL SEE THIS??? NO!!!!! THAT WOULD BE TO EASY AND IT WOULD EFFECT THESE GUYS THAT ARE THE PROBLEM

December 12 2010 at 8:50 PM Report abuse rate up rate down Reply
clark8642

I think the original stimulus was $752 billion, a third of which was tax cuts. That is less than the approximate $1 trillion cost of the new deal yet I hear little in the way of complaint as long as we all get our tax cut. Hopefully there will be gridlock which will kill this deal and the Bush tax cuts will expire. Then Congress can carefully consider major spending cuts. AFTER the spending cuts are made, then and only then, hopefully we can afford new tax cuts for anyone, rich or poor. In the meantime our borrow and spend politicians in both parties need to get serious and start matching our revenues and expenses. Less spending or more taxes or some of both.

December 11 2010 at 3:58 PM Report abuse +1 rate up rate down Reply
johnskii

Another stupid, worthless, biased, untruthful story by a writer who probably has a seat at Christmas dinner at the White House, Pelosi or Reid's home this holiday season....

December 11 2010 at 11:42 AM Report abuse +5 rate up rate down Reply
duey35

Ok I have to go bye. Liberals you may now go back to posting your trivial thoughts.

December 11 2010 at 11:35 AM Report abuse +5 rate up rate down Reply
duey35

Garden went to get tweezers to thin her weed patch.

December 11 2010 at 11:28 AM Report abuse rate up rate down Reply
1 reply to duey35's comment
duey35

True but arguing with no information is like walking off a pier you get an eye opening experience at the end.

December 11 2010 at 11:32 AM Report abuse +1 rate up rate down Reply
gardeningatnite

GARDENINGATNITE You have no clue how expensive it is toperate a small business---...........LOL! You should tell that BS story to my accountant!

December 11 2010 at 11:08 AM Report abuse -1 rate up rate down Reply
1 reply to gardeningatnite's comment
gardeningatnite

Moot points are worthless points??? LOL! My daddy is bigger than your daddy and he will kick your daddies butt..........6th grade???

December 11 2010 at 11:17 AM Report abuse -1 rate up rate down Reply
duey35

Garden where do business get their money to expand and operate year to year?//// from the procedes they get from the stock market by selling shares of the company.

December 11 2010 at 10:55 AM Report abuse rate up rate down Reply
9 replies to duey35's comment
duey35

Danny have you eveer had an original thought? If all your opinions are based off what others write, you need to diversify your reading and let your own mind figure out what is what.

December 11 2010 at 10:49 AM Report abuse +1 rate up rate down Reply
duey35

gardeningatnite 10:37 AM Dec 11, 2010 • If the engine don't work right........you replace it with a new and improved engine!..........Small, local business........millions of them everywhere! Local economies=local needs!/////////// Local needs is a small minded thought process. Think about providing for the world. That is big business. supply and demand or need and supply.

December 11 2010 at 10:40 AM Report abuse -1 rate up rate down Reply
3 replies to duey35's comment