Record monthly deficit for U.S.: $221 billion

By Annalyn Censky, staff reporterMarch 10, 2010: 4:19 PM ET

NEW YORK (CNNMoney.com) -- The United States dropped a record $220.9 billion further into the red in February, the Treasury Department reported Wednesday.

The shortfall was up from the previous record $193.9 billion shortfall in February last year.

It's the 17th straight month that the U.S. government has posted deficits. The last time the government posted a monthly surplus was in September 2008, when the government reduced the deficit by $45.7 billion.

The cumulative deficit for fiscal 2010, which started in October, reached $651.6 billion, up from $589.8 billion in the same period the year before. The Obama administration is forecasting that the deficit will hit $1.56 trillion this year.

Spending increases overshadow revenue boost: Wednesday's announcement came as little surprise to economists, who expected the deficit for February to total $222 billion, according to a consensus compiled by Briefing.com.

Receipts totaled $107.5 billion, up from $87 billion in February last year and outlays totaled $328.4 billion, up from $281 billion.

Despite the government's record losses, the year-over-year boost in revenue during February is at least one hopeful sign that the economy is faring better, said Robert Bixby, executive director for the Concord Coalition, a federal budget watchdog group. It was the first time since April 2008 that the government posted higher revenue when comparing monthly data year-over-year.

The overall losses were most likely driven by the recession and tax refunds, said Nathan Topper, an associate economist with Moody's Economy.com.

February is traditionally a big deficit month for the government, as Uncle Sam starts writing tax refund checks, he said. And because the recession dampens business profits and wages, refunds spike. There were $65 billion in tax refunds recorded in February this year, compared with $77 billion last year and an average of $49 billion for last decade, according to Moody's Economy.com.

Corporate income tax refunds were higher than usual because of legislation that allows them to apply current losses against prior profits to become eligle for refunds.

In February, the President Obama signed into a law a record $1.9 trillion increase to the government's debt limit, bringing the new cap to about $14.3 trillion.