The US budget deficit is expected to hit a record $1.4 trillion this year, some $950 billion greater than the shortfall recorded last year, the Congressional Budget Office (CBO) said.

Congress's non-partisan financial watchdog said the forecast federal deficit for the fiscal year that ended last month was the highest shortfall - relative to the size of the economy - since 1945.

The deficit resulted from both declining revenues and increased spending, stemming mostly from aid to the financial system and fiscal stimulus to jolt the world's largest economy from a prolonged recession, the CBO said.

Revenues were almost $420 billion or 17 per cent below receipts chalked up last year, the lowest level in over 50 years.

At the same time, outlays increased by over $530bn or 18pc to the highest level also in over half a century. The federal deficit last year was $459bn.

The deficit estimates were based on data from daily statements from the US Treasury and CBO projections.

Treasury officials said they would report the actual deficit in the middle of this month.

The White House projected that the fiscal budget deficit would reach $1.58trn.

It also estimated a whopping $9.05trn deficit for the 2010-2019 period, a $2trn increase from the February estimate made a month after President Barack Obama entered office.

The CBO said the federal government recorded a deficit of $31bn last month, compared with a surplus of $42bn in the same period last year.

'Quarterly payments of estimated individual income taxes and corporate income taxes typically result in a surplus for September; however, lower revenues and increased spending resulted in the 12th consecutive month of budget deficits,' it said.