The U.S. government’s budget deficit widened in June to its highest level in two years, as revenue growth continues to slow.
Over the past year, the deficit totaled $523 billion, up 20.6% from a year earlier, the Treasury Department said in a monthly update Wednesday.
The deficit has largely been a result of weaker corporate tax revenues. While individual income taxes have been on the rise thanks to steady job growth, corporate taxes have been declining. Corporate profits have fallen alongside a slowdown in productivity, and firms are paying out a larger share of revenues in wages as the job market tightens.
The government posted a slight surplus for June, as revenue exceeded outlays by $6.3 billion. That was a substantially smaller surplus than the $50.5 billion posted in June 2015.
Economists look at the deficit as a share of the economy’s output to determine how big of a burden it represents to the federal government. In the 12 months through June, the deficit represented 2.9% of the nation’s economic output, or gross domestic product. That was up from 2.6% of GDP in the 12 months through May, and the highest level since March 2015.
The longer-term trends show a rising deficit. Revenues over the past year climbed just 2.0% compared with the 12 months through June 2015, the lowest annual rate since 2010. Earlier in the current economic expansion, revenues routinely grew by more than 6%. By contrast, government spending has been steadily rising, thanks in part to increased spending on Social Security and Medicare as the country’s demographic profile gets older. Overall outlays rose 4.3% in the past 12 months compared with the year through June 2015.