CBO says $871 billion deficit so far in FY 2011

WASHINGTON (Reuters) - The budget deficit totaled $871 billion for the first seven months of this fiscal year, significantly above the previous year's pace, the Congressional Budget Office said on Friday.

The $871 billion deficit through April was about $70 billion more than the deficit the government incurred during the same period of fiscal 2010, highlighting the severe fiscal stress President Barack Obama and Congress confront.

Earlier this year, CBO forecast a $1.4 trillion budget deficit for the entire fiscal year that ends on September 30.

In one bit of good news, CBO, the nonpartisan budget analyst for Congress, estimated in its monthly budget review that the deficit just for April will be around $41 billion -- down from the April 2010 deficit of $83 billion.

That is due to stronger government receipts during the spring tax-filing season, according to CBO.

"Receipts of individual income taxes have been significantly greater than CBO anticipated," the agency said, which could be an indication of a strengthening economy.

Economists polled by Reuters have forecast that the Treasury Department will report a $65 billion April budget deficit on May 11.

Spending, however, continued to accelerate compared to last year. CBO said that through April, U.S. outlays were $2.180 trillion, up from $1.999 trillion for the same period the previous year.

(Reporting by Richard Cowan; editing by Mohammad Zargham)