WASHINGTON — Moody's Investors Service upgraded the outlook for U.S. government debt to "stable" from "negative" and affirmed the United States' blue chip Aaa rating.

The rating agency cited a surprising drop in the federal deficit — the difference between what the government collects in taxes and what it spends. The U.S. government is on track to report its lowest annual deficit in five years.

Through the first eight months of the budget year, the deficit has totaled $509.8 billion, according to the Treasury Department. That's nearly $400 billion lower than the same period last year.

The Congressional Budget Office forecasts the annual deficit will be $670 billion when the budget year ends on Sept. 30. That would be well below last year's deficit of $1.09 trillion and the lowest since President Barack Obama took office. It would still be the fifth-largest deficit in U.S. history.

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