MercoPress. South Atlantic News Agency

US February budget deficit was the largest in history: 221 billion USD

Treasury Secretary Timothy Geithner called the deficit “unsustainable”.

The US government recorded a budget deficit of 221 billion US dollars in February - the largest monthly deficit in its history. The total deficit since the beginning of the fiscal year in October now stands at 651.6 billon according to US Treasury figures.

That puts it on track to beat last year's record annual budget deficit of 1.4 trillion US dollars. Treasury Secretary Timothy Geithner called the deficit “unsustainable”.

However, he maintained that running the deficit was helping the US continue its recovery from the recession in the short-term.

Like the UK, the US is suffering from a fall in tax receipts due to tough economic conditions, while relying on increased spending to drive the recovery.

But analysts called the figures “frightening”.

Earlier this year, the Congressional Budget Office (CBO) said it expected the budget deficit to fall this year as the recovery takes hold.

On the bright side the US trade deficit fell unexpectedly in January, following a big drop in imports of oil and foreign cars.

The US Commerce Department said the trade gap was a seasonally adjusted 37.3 billion, 6.6% lower than the revised December figure of 39.9 billion.

Imports dropped 1.7%, with crude oil imports at their weakest level since February 1999, at 245 million barrels.

The politically-sensitive trade gap with China widened to 18.3 billion, up from 18.1 billion in December. US exports fell by 0.3% in January, with less machinery, agricultural products and civilian aircraft sold.

However the trade gap's fall was a surprise. Economists had expected it to widen further after it increased by nearly 10% between November and December.