The U.S. budget deficit reached $2.77 trillion during fiscal year 2021, which ended last September 30, the second largest in the country’s history.
Secretary of the Treasury Janet Yellen and director of the Office of Management and Budget Shalanda Young highlighted in a statement that the 2021 deficit was $360 billion lower than the previous fiscal year, when the pandemic broke out.
As a share of the economy as a whole, the deficit in 2021 accounted for 12.4 % of gross domestic product (GDP), down from 15 % in fiscal 2020.
Spending was spurred by pandemic-related costs such as extended unemployment benefits, emergency loans to small businesses, and direct deposits to the most vulnerable households.
Government spending rose 4.1 % to $6.82 trillion, while federal revenues rose 18 % over last year to just over $4 trillion.
The rise in federal revenues was due in large part to the state’s higher taxation of individual income and corporations, which exceeded official projections, yet the U.S. economy is still reeling from a gigantic budget deficit, and a huge debt that has in turn triggered inflation.