US Borrowing Needs Hit 7-Year Low as Economy Picks Up

Monday, 04 Aug 2014 08:58 PM

 

  Comment  |
   Contact  |
  Print   |
    A   A  
  Copy Shortlink
The U.S. Treasury said its borrowing needs this quarter declined to the lowest level for the period since 2007 as stronger economic growth boosts tax receipts.

Treasury plans to borrow $192 billion in the July-September period, about $22 billion more than it projected three months ago, with an end-of-September cash balance of $150 billion, the Treasury said Monday in Washington. Next quarter, Treasury plans to borrow $187 billion, with $140 billion in cash Dec. 31.

U.S. budget deficits have been falling since 2009. The 2014 gap will be 2.8 percent of gross domestic product, according to the Congressional Budget Office. The projected deficit is down from 9.8 percent of GDP in 2009, when President Barack Obama took office.

The U.S. economy grew at a 4 percent annualized rate from April through June, exceeding the median forecast of economists surveyed by Bloomberg, the Commerce Department said July 30. The budget gap so far this fiscal year is the smallest since 2008.

“Tax receipts continue to be fairly strong, which is helping Treasury to fund outlays without relying as heavily on debt issuance as they had over the past five years,” Thomas Simons, an economist in New York at Jefferies LLC, said in an e-mail after the report was released.

The Treasury said it paid down $64 billion in marketable debt in the April-June quarter, less than an April projection of $78 billion. The cash balance was $130 billion at the end of June, matching the previous estimate.

The Standard & Poor’s 500 Index advanced 0.7 percent to 1,939.99 at the 4 p.m. close of trading in New York. The yield on the benchmark 10-year Treasury note was little changed at 2.49 percent.

Job Gains

The economy added more than 200,000 jobs for a sixth straight month in July, showing progress toward sustaining faster growth entering the sixth year of expansion. The improving conditions drew more job seekers into the labor force, pushing the unemployment rate up to 6.2 percent from 6.1 percent.

The degree of hiring this year may help trigger a self-reinforcing cycle of better spending and job opportunities that will spur the economy. Manufacturing also expanded last month at the fastest pace in more than three years, led by a surge in orders.

The economy’s 4 percent growth in the second quarter came after GDP shrank 2.1 percent from January through March, Commerce Department figures showed last week. Gains in consumer spending and business investment spurred the rebound.

Resilient Recovery

“While economic growth may have faltered temporarily in the first quarter, the recovery has been resilient on the whole, with solid private-sector demand helping to offset the effects of extensive fiscal retrenchment over the last few years,” Karen Dynan, the Treasury’s chief economist, said in a statement.

Monday’s Treasury borrowing estimates precede the department’s quarterly refunding announcement on Aug. 6, when the sizes of monthly note and bond sales are released. At the past refunding, the Treasury trimmed auctions of two- and three-year notes.

The last time the Treasury borrowed less than $192 billion in the July to September quarter was in 2007, when it borrowed $105 billion.

© Copyright 2014 Bloomberg News. All rights reserved.

  Comment  |
   Contact  |
  Print   |
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
You May Also Like

Economist Katusa: Oil Price Drop 'Painful, But Not Terminal' for Russia

Wednesday, 17 Dec 2014 14:50 PM

While plunging oil prices have sent Russia's economy and the ruble reeling, they aren't a death knell for the nation by  . . .

Fed Vows Patience on Rates While Dropping Considerable Time

Wednesday, 17 Dec 2014 14:43 PM

The Federal Reserve said it will be patient on the timing of the first interest-rate rate increase since 2006, replacing . . .

Steve Forbes: Russia's Ruble Defense Is Bound to Fizzle, Look Out Below

Wednesday, 17 Dec 2014 12:38 PM

The desperate rate hikes by Russia's central bank are bound to end up doing nothing to boost the ruble's value, predicts . . .

Most Commented
Top Stories

Newsmax, Moneynews, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, NewsmaxWorld, NewsmaxHealth, are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved