The US Daily Cash Deficit for 5/31/2013 was $37.5B, wrapping up May 2013 with a $159B deficit compared to May 2012’s $136B. However, as suspected, about $30B of June outlays were pulled into May due to 6/1 being on a weekend. Adjusting for this, May would have posted marginal, but not that impressive improvement.
As presumed, Treasury Secretary Lew started pulling money out of his magic hat…about $31B of “extraordinary measures”, raising enough to pay the $47B of 5/31 Outlays and increase cash from $20B to $35B….which should be enough to clear the 6/3 Social Security Payments of $25B.
While tax deposits withheld were up nearly 13% YOY, Declines elsewhere reduced the total revenue YOY growth to 6.6%, a disappointing follow up to April’s 26.6% surge. So revenue is a mixed bag. It is a very good sign to see taxes withheld…by far the largest source of revenues continue to see solid YOY growth above 10%. On the other hand….those other sources of cash are important too, and 6.6% growth is disappointing, but it is just one month. If we are ever to fix the deficit problem, and I’m on record as doubtful….we are going to string together 5-10 years of double digit revenue growth with 5-10 years of single digit outlay growth.
I’ve been saying for a while now that May was going to be our first clean look at the 2013 tax hikes. 6.6% is well below what I expected, but as noted, the internals do show some promise. June, as a quarter end will give us our second clean look at the 2013 tax hikes….though there seems to be a good chance a $60B payment from Fannie Mae will provide the illusion of another surge. Good thing I know how to subtract:)
While they post as up 11%, most of this is the June cost pull foreword of about $30B. This will fall out in June as a decrease in cost. Adjusted for this, we see another month of flat cost..no real surprises. Of interest, Social Security was up from $56B last May to $61B this year, a 10% gain, and over $60B annualized. On the other side, we saw spending on defense vendors and unemployment each fall $2B. Unfortunately, sooner or later, the falling categories are going to flatline while SS is going to start accelerating the other way.
On the surface…it was an ugly month. Deficit up, cost up, and revenue up only 6.6% vs. the 12% or so we were expecting. But when you look inside, the cost was nearly all timing, and while revenue really was down, the withheld tax deposits number was actually the best through 5 months. So onward we go to June, which should be another interesting month. We will get a chance to see if the internals of the revenue were one offs, or if a trend one way or the other is being established. I will be keeping an eye on the taxes not withheld number for this quarter close, and we will also get to see more “extraordinary measures” shenanigans, topped off by a $60B payment from Fannie Mae predicated in some rather outrageous accounting gains. This one could get crazy, but right now,I would forecast about a $15B normalized Surplus for June, but then add $30B for the cost pushed to May, and another $60B for the prospective Fannie Mae payment…so $105B surplus with revenues and Fannie Mae being the wildcards.