US Daily Cash Deficit 7/3/2014

The US Daily Cash Deficit for Thursday 7/3/2014 was $30.1B, following a $6.4B surplus on 7/2 and a $38.4B deficit on 7/1. Add them all up and the Deficit through 3 days rings up to $62B….knocking out a big chunk of June’s $78B surplus in only 3 days. Nothing extraordinary about this…most months are heavily front loaded in outlays thanks to Medicare, SS payments, and other monthly outlays that typically go out in the first few days of the month. Still…it’s a bit sobering.

2014-07-03 USDD

Above is our first chart of the month….with revenues down $8B and outlays flat. Also note that this is completely unadjusted….3 days of 2013 vs. 3 days of 2014….I noted in my forecast post that July was at a bit of a timing disadvantage, and a big part of that is that it started on a Tuesday…which typically has weak revenues, especially compared to July 2013, which started on Monday…which generally has the strongest revenues. Regardless…2014 starts in a hole…and is going to need solid revenue growth for the remainder of the month to dig its way out.

It was just a few days ago that I forecasted a $60B deficit for the entire month…and yet here we are 3 days in at $62B. I’m going to stick to it for now though… In a few weeks the timing should start to even out and if revenue continues to show moderate growth between 5-10%….my forecast should be ok…..if….

July 2014 Cash Deficit Forecast

Let’s start out with a look back at June where my $85B Surplus forecast was $7B over the actual at $78B. Not too shabby….our model seems to have settled in and is giving us a +/-$10B range….though it is prone to an occasional bust like we saw in April(+55B).

July is a typical Deficit month…last year posting a $90B deficit on $220B of revenues and $310B of outlays. This year, I’m forecasting the July deficit comes in a bit lower at a $60B Deficit on solid revenue gains and outlays being down a bit…primarily timing of interest payments. Of course…the key here is cautiously optimistic revenue growth…if it comes in at 1% my forecast will be a bust.

US Cash Deficit June 2014

The US Daily Cash Surplus for Monday 6/30/2014 was $16.2B, following Friday’s $1.5B surplus, and bringing the June 2014 deficit for the full month to $78B for the month.

2014-06-30 USDD

As you can see… June 2014 surplus falls $38B short of last year with the primary culprit being last June had a special Fannie Mae dividend that pushed total GSE revenues to $66B….compared to only $10B this month. Now, I never expected anything close to last year, but last quarter GSE revenues came in at $18B…so $10B is quite short of expectations. I don’t know if this was a one off, or if the Fannie/Freddie Gravy train is drying up….we’ll know more 9/30 when the next payment is scheduled.

But that aside…the truth is that revenues blew away my expectations… admittedly lowered by 2 months of 1% growth. Taxes withheld were up 13%, taxes not withheld were up 13%, and corporate taxes were up 11%. Some of this was no doubt due to an extra business day and favorable timing, but not all of it. It will be interesting to see how July holds up….as it has a bit of unfavorable timing, though business days stay the same. Anything over 5% would be ok in my book.

Outlays surge at +18B…or +7%. However, $12B of that is timing of interest payments….other than that there are ups and downs across the board, but one really sticks out. Medicaid…up 26% from $21.1B to $26.6B….I would guess driven by Obamacare. For the year…Medicaid is up 14% and +$18B. Lucky for us…all those states decided not to expand Medicaid (yet) or this could be accelerating even faster.

At the end of the day….it was a good month. Revenues handily beat expectations and at least temporarily put to rest the fear that revenues were about to collapse after 2 months of 1% growth. Outlays were up, and while a good chunk of it was timing, it does appear that we are on the cusp of returning to a growth in outlays …over all say 1-3%…but we’re not there yet.

Hopefully more in depth analysis at  later date, but for now…on to July.