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US budget deficit shrinks 35 percent through August

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The U.S. government posted a narrower budget deficit in August compared with a year ago, keeping the annual gap on track to be the smallest in five years.

The Treasury Department says the deficit in August was $147.9 billion, down from $191 billion in August 2012. That brings the budget gap to $755 billion for the first 11 months of the budget year, down 35 percent from nearly $1.2 trillion a year earlier.

(Read more: Surprise! Huge US budget surplus shatters record)

(Read more: Deficit fears fade on Wall Street: CNBC survey)

The government is likely to post a surplus in September, lowering the full-year deficit to $642 billion, the Congressional Budget Office forecasts. That would be the first deficit below $1 trillion in five years.

Steady economic growth and higher tax rates boosted the government's revenue 4 percent in August, while spending was 10 percent lower.

(Read more: Economists:Future deficits top US fiscal problem)

-- By AP

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