November 2013

The US Daily Cash Surplus for Tuesday 11/12/2013 was $3.9B…pushing the November 2013 Deficit down to $52B through 12 days….virtually unchanged from the $56B deficit we posted on 11/1. Since then, it’s been a deficit here, a surplus there…more or less netting to zero. But that likely ends with tomorrow’s report as a $12B SS payment is scheduled to go out, followed by ~$30B in interest payments on Friday.

There is really no bad news in today’s DTS…revenues gained another $2B over last year and outlays were down a little. Withheld tax deposits are running at +9%…pretty much in line with expectations, while everything else is flat netted together.

The US Daily Cash deficit for Friday 11/8/2013 was $3.5B, bringing the deficit for November 2013 to $56B through 8 days.

The month continues to book solid YOY gains with Revenue being up 7% and Outlays being down 7% giving us our $12B deficit improvement so far. On deck…Tuesday’s following a holiday are always unpredictable, so we’ll find out what happened  with that tomorrow followed by a $12B social security payment that goes out 11/13 (we’ll see it in the report issued 11/14) Friday 11/15 brings in some additional tax revenues, but will be overwhelmed by a large interest payment due…~$30B. It’s still too early to know, but I have to be honest…I’m starting to get a bit nervous that my $160B full month forecast may have been a bit pessimistic, but hey…that’s a good thing right!!

The US Daily Cash Deficit for Thursday 11/7/2013 was $3.9B bringing the November 2013 cash deficit through 7 days to $52B, $12B under the 11/2012 benchmark through 7 days of $64B.

Revenues continue to look solid currently at +5% YOY and gaining. Outlays still look weak, though they may make up some ground next week.

I was poking through the data and found it very interesting to compare the YOY change in revenues over the course of the year. For the first six months of 2013 we saw phenomenal YOY revenue growth at +18%. Over the same period we also saw outlays decline 3%. However….compare that with July-October with revenue up only 9% (still impressive…but not +18%) and outlays at +1%. It seems pretty clear that the tax avoidance timing and the Fannie Mae games have been flushed out, and a lower baseline has emerged.

Come 2014…I suspect a new baseline will emerge…certainly for revenues which will not have the benefit of a Jan 1 SS tax hike to pad their stats, and perhaps even for outlays. For example, by the end of 2013, payments to defense vendors will likely be down about 11%, or $45B below 2012. What will 2014 bring? Another $45B cut, or have we reached a new baseline? The second $45B is going to be a lot harder to cut than the first, so stay tuned. There is no doubt that 2013 is making some significant headway in decreasing the annual deficit, but I am still doubtful that progress can be maintained in 2014 and beyond. Hope I’m wrong 🙂

The US Daily Cash Surplus for Wednesday 11/6/2013 was $4.7B, pulling the November 2013 deficit through 6 days down to $49B.

Through 6 days, there is really nothing to note other than revenues look good…being up a bit over 2012 despite being down a business day. Outlays are also down….which is likely attributable to one less business day, but we would more or less expect the gap to narrow over the rest of the month (but you never know). Also note that SS payments go out on the 2nd-4th Wednesdays of the month. Since this is the first Wednesday…no payment. The first SS payment (~$25B) goes out on the 3rd, unless that falls on a weekend or holiday, which is why they went out 11/1 this month.

On deck….we have a federal holiday Monday….$12B of SS payments next Wednesday, then about ~$30B of interest payments on 11/15, so we could be knocking on $100B by the end of next week.

Although I’m a few days late, it’s time to make the November deficit forecast. Now…before I do, I think I should take a moment to toot my own horn….In October, I forecasted a $91B deficit and actuals came in at $87B….marking my best performance to date over the last five months (which is how long I’ve been doing a “formal” preview). The biggest miss was $18B in August and the average is 11. So…skill??? Probably not. We’ll chalk this one up to luck.

Remember…all we are doing here is taking a look at historical revenues and outlays by category and using that historical data to make a current forecast. For most categories, it’s just a matter of multiplying last year’s number by an increase or decrease that matches the trend. For example…last November, federal tax deposits were $145.408B. For 11/2013, I am forecasting $161.403B… an 11% increase, which is in line with the trend for this category. Moving out to this next January, my current forecast drops that growth down to 6%, though honestly I don’t really know what to expect…it’s essentially a whole new world.

So you can see, it’s not rocket science, but it is a bit tedious, especially once you start trying to adjust for timing. With 12/1 falling on a Sunday….a big chunk of those 12/1 expenditures like Medicare, Military Pay, pensions ect…all get pulled into November causing a headache, but it’s not too bad if you have the historical data to make appropriate adjustments.

So, while admitting November is a bit chaotic, and that I am unlikely to match my October success, I’ll go ahead and throw my dart. Revenues will end up at $202B(vs $180B 11/2012) and outlays will come in at $362B (down from $368B), good for a $160B cash deficit in November 2013…. a $28B improvement over last November.  Happy Thanksgiving…hope you enjoy your household’s $1,400 share of the monthly deficit!!