Government posts $120.3 billion budget deficit in Nov

WASHINGTON (Reuters) - The United States posted a smaller-than-expected $120.3 billion budget deficit in November, Treasury Department data showed on Thursday.

The November deficit fell short of analysts’ consensus forecast in a Reuters poll for a $135 billion budget gap. It compared with a $176.4 billion deficit posted in October and a $125.2 billion gap for the same period a year ago.

“While there is still some pain unfortunately left in the pump, the fact is that some movement has been made and if we can keep that inertia going that will be great,” said Daniel Penrod, senior industry analyst for the California Credit Union League in Ontario, Calif.

“Those who are waiting for a V-shaped rebound are probably going to be disappointed,” Penrod said. “It is not going to be a one-step recovery, it is going to be more baby steps as we move through this.”

In November, outlays fell for the second straight month, dropping to $253.9 billion from $311.7 billion in October and compared with $270 billion in November 2008, Treasury said.

Receipts totaled $133.6 billion, down from $135.3 billion in October and the lowest for November since 2005, the department said. Receipts in November 2008 stood at $144.8 billion.

The Treasury bought $7.2 billion worth of mortgage-backed securities from housing finance agencies in November.

A Treasury Department official attributed some of the drop in spending this month to a shift in the calendar which put November 1 on a Sunday, sending $15 billion into October and kick starting the new fiscal year with a swollen deficit.

The deficit over the two months of the new fiscal year to date now stands at $296.7 billion compared with $280.7 billion for the same period a year ago and the record $1.4 trillion in the just ended 2009 fiscal year.

The budget is likely to have a similar gap in this fiscal year, ending on September 30, 2010.

Rescuing the economy and some of the country’s biggest banks from the worst recession since the Great Depression took a toll on U.S. finances, and the White House has forecast deficits of more than $1 trillion through fiscal 2011.

U.S. President Barack Obama has pledged to rein in high budget deficits by addressing long-term challenges like health care and energy costs in a fiscally responsible way.

President Barack Obama and his economic team are working on a range of options as administration prepares for the fiscal year 2011 budget to be released in February.

Reporting by Nancy Waitz