WASHINGTON (AP) — The Biden administration is forecasting that this year's budget deficit will be nearly $400 billion lower than it estimated back in March, due in part to stronger than expected revenues, reduced spending, and an economy that has recovered all of the jobs lost during the multi-year pandemic.

In full, this year's deficit will decline by $1.7 trillion, representing the single largest decline in the federal deficit in American history, the Office of Management and Budget says.

Despite the gains, the administration said Tuesday that it is forecasting a deficit of $1.03 trillion for the budget year that ends Sept. 30. That number signifies a movement away from the record deficit in 2020, which reached $3.13 trillion.

The administration's Mid-Session Review said much of the improvement in the deficit forecast for this year stemmed from the economy "transitioning from a historic and rapid recovery to stable and steady growth."

The administration sees inflation pressures remaining into 2023, however.

"The President's top economic priority continues to be tackling the challenge of inflation, without giving up the historic economic gains we've made over the past 18 months," said Shalanda Young, director of the Office of Management and Budget in a statement.

"While costs are still too high for too many families, the President's economic plan is working and we're on the right track," she said.

Because the projections of the Mid-Session Review were finalized in June, it does not include the $280 billion CHIPS and Science Act and estimated $740 billion climate, healthcare and tax measure.

And while the non-partisan Congressional Budget Office in July said, that fast economic growth and higher tax revenues have caused the federal debt this year to be lower than forecast, the organization warns in its 30-year outlook that debt will soon spiral upward to new highs that could ultimately imperil the U.S. economy.