(Bloomberg) -- The U.S. federal budget deficit will soar to a record $3.3 trillion this fiscal year in the wake of massive government spending aimed at mitigating the economic damage from the coronavirus pandemic, according to the Congressional Budget Office’s latest tally.
Even so, the shortfall is smaller than the non-partisan agency’s April projection of $3.7 trillion. In 2019, the gap was $984 billion. The updated budget estimate, issued Wednesday and which incorporates legislation enacted through Aug. 4, also showed the U.S. deficit will total $1.8 trillion in fiscal 2021.
The projected deficit for this year would equate to 16% of gross domestic product, up from 4.6% in 2019 and the largest since World War II. U.S. government outlays this fiscal year will jump to $6.6 trillion, the CBO estimated as lawmakers scrambled to put in place fiscal backstops to preserve jobs and companies after state-ordered shutdowns of non-essential businesses.
The resulting economic recession is also being reflected on the other side of the nation’s fiscal ledger. Revenue is projected to fall to $3.3 trillion this year from almost $3.5 trillion in 2019.
A rapidly expanding government deficit means more U.S. borrowing, and the CBO projects debt held by the public will increase to $33.5 trillion at the end of 2030, or 109% of GDP. It will exceed GDP starting in the next fiscal year.
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