Washington, May 20 (Bloomberg) -- The U.S. government's April budget surplus narrowed as the economy struggled, reducing annual income-tax collections, economists said they expect the Treasury to report today. The surplus probably shrank to $50 billion last month from $67.2 billion a year earlier, based on the median of 39 forecasts in a Bloomberg News survey. It would be the month's smallest surplus since $49.7 billion in April 1995. In 2001, the April surplus reached a record $189.8 billion.
``The persistent downturn in the stock market reduced capital gains,'' said William Sullivan, an economist at Morgan Stanley in New York. Unemployment, which last month reached 6 percent, matching the highest in eight years, also reduced revenue, Sullivan said. The economy lost more than a half-million jobs over the past three months. Federal spending increased on homeland security and the military in the aftermath of the Sept. 11 terrorist attacks, on Medicare, Medicaid and Social Security, and for higher energy costs. The Treasury issues its monthly budget report at 2 p.m. Washington time. The Congressional Budget Office last week raised its estimate of the 2003 U.S. budget deficit to more than $300 billion, which would be a record, from $246 billion. The revised estimate is in line with White House projections, which have the deficit reaching $304 billion in the fiscal year ending Sept. 30 and $307 billion in fiscal 2004.
March Shortfall
The CBO, a nonpartisan agency that analyzes the budget, said this year's deficit reached $202 billion through April, more than three times as much as a year earlier. In March, the U.S. reported a $58.7 billion deficit, compared with $64.8 billion in March 2002 and $50.7 billion in March 2001. The government typically has shortfalls that month as it mails out tax refunds. For fiscal 2002, the U.S. posted a $157.8 billion deficit following four years of surpluses. The record shortfall was in fiscal 1992 at $290.4 billion, about 4.7 percent of gross domestic product. Last fiscal year's deficit amounted to about 1.6 percent of the $10 trillion U.S. economy. The White House calculates that this year's budget shortfall will be about 2.8 percent of gross domestic product. //www.bloomberg.com