US Daily Cash Deficit 2/3/2015

The US Daily Cash Deficit for Tuesday 2/3/2015 was $33B bringing the February 2015 deficit through 3 days to $20B after Monday’s $10.6B surplus.

2015-02-03 USDD

As is standard here, I have synced up 2015 and 2014 on day of the week so we are comparing 2015 through Tuesday 2/3 to 2014 through Tuesday 2/4. Both February 2014 and February 2015 start on a Monday(business day), end on a Friday, and have 19 business days, so we should be pretty well synced up for the whole month. Starting out, revenues are flat and outlays are up $6B…most of which is January’s interest payment that slipped from 1/31 to 2/2. However, refund season is clearly here with nearly $6B of refunds so far in addition to January’s $11B. 2014, however, didn’t kick off until Thursday 2/6/2014….but once it did it was pretty strong. The YOY delta in this account is likely to be the biggest driver this month, so we’ll pay close attention to it especially starting next week. For now, 2014 and 2015 are pretty much tied up….

US Cash Deficit January 2015

The US Daily Cash Deficit for Friday 1/30 was $47.4B, pushing the January deficit for the full month to $28B.

2015-01-31 USDD

There were a few surprises. First off, $10.5B of refunds went out. I didn’t expect any material refunds until the first week of February, but there they are. I account for refunds  as negative revenues, so the result was a big hit to January revenues. Other than this, Friday revenues were a bit lower and outlays a bit higher than I would have predicted, pushing the deficit about $18B over the range I provided just a few days ago.

Revenues:

After looking like they were honing in on a solid +3% gain, Friday’s tax refunds pull revenue back under last year for a 1% loss instead. Adding refunds back in gets us to a 2% YOY gain. Withheld taxes were up 2.4%, taxes not withheld were up 7%, while corporate taxes were down 2%. Individual Tax refunds went from $1B last year to $11B. Altogether, it was an ok, but not impressive month for revenues. It will be interesting to watch refunds in February….was Friday’s $10.5B of refunds an indicator of a larger than expected refund season, or just a timing event? I believe that the refund season was delayed a week or so last year due to the late congressional wrangling delaying forms or something… In any case, last February had $128B of refunds. I keep reading that refunds will likely be lower as millions have their Obamacare penalties taken out of their refund, and others who underestimated their income for the Obamacare subsidies will see the difference taken out of their refunds as well. This coupled with the timing event we just saw adds a lot of uncertainty to February. I honestly haven’t a clue, but I’ll peg it at $105B on timing and an overall decrease in refunds.

Outlays:

Outlays end down $3B, helped out by ~$5B or so of interest payments that were bumped to February 2. Also helping was my -$7B adjustment for unamortized discounts and premiums. Generally, this number is positive as debt is sold at a discount…for example a $100 bond sold for $99. Rather than attempting to track and amortize hundreds of issues, i would just book the $1 as essentially an outlay in the period incurred, while the accountants would instead recognize it as interest over the life of the debt. Over time it all zeroes out. In any case, while these are generally positive…and thus increase outlays, this month we have a -$7.3B…essentially an offset to outlays. Negatives are not unprecedented….they would indicate that on average more debt was sold at a premium for whatever reason last month. In that case, we get $101 cash, for  a $100 bond. For more information on this, read here….or you could just trust me on this one 🙂 In 2014, this averaged about +$4B per month….it will be interesting to see if that trend changes. If you add those two items back in and you get to a 2-3% YOY growth rate in outlays, which could indicate after 5 years of stability, outlays are about to start growing again. Looking to the categories, we see small reductions in defense vendor spending… most categories fairly flat, maybe down a little and the SS, Medicare and Medicaid up +14B together.

January Summary:

Add it all up and adjust for timing, and January basically looks like revenue +2-3% and outlays +2-3%, which is a pretty solid recipe for another $600B deficit in 2015. But…the year is young and February through April are notoriously unpredictable.

February Forecast:

Before I attempt to predict the “notoriously unpredictable”, let’s take a look at January’s forecast. My early forecast was for a ~$20B deficit, we ended up at $28B, for a $8B miss, a little bit better than my average miss of $11B. However, the internals were not as pretty. It turns out that my revenue forecast was about $15B high, offset by my outlay forecast which missed by $8B the other way. Usually that’s how it goes….I aim for the middle, and hope all the randomness and surprises net out. Sometimes it does, sometimes it doesn’t.

For February, I’m going to forecast a $210B deficit, which includes backing my revenue growth back a few %, as well as backing down expected refunds for timing and Obamacare as discussed above.  So stay tuned….the next few months should be fairly interesting…well…you know 🙂

US Daily Cash Deficit 1/29/2015

The US Daily Cash Deficit for Thursday 1/28/2014 was $4.8B bringing the January Surplus with one business day remaining to $20B.

2015-01-29B USDD

Revenues stand at +3%. Outlays are flat overall, but there is some interesting movement. First off, Medicaid continues to grow….likely at over 15% YOY. One month isn’t a trend…..and last January probably hadn’t seen the full effect of expansion hit cash flow by then, but still interesting. Last year Medicaid spending grew $49B good for an 18% clip. Social Security…a program nearly 3 times the size as Medicaid, grew only $37B. January looks to continue that +$4B/month trend….let’s hope it slows down a bit by the second quarter because that eats up about half of revenue growth at +3% growth….

The other interesting item in outlays is unemployment payments. After averaging $2.7B a month in 2007, they zoomed upwards, peaking at $16.1B in 3/2010….and they’ve been falling just about ever since, hitting a 7+ year low in November at $2.172B…..but then jumping to $3.2B in December. I figured it was just timing….December 2013 had a $1B jump as well, though prior years didn’t. In any case, January 2014 got right back on the trend. January 2015 though…with one day left looks to match December 2014 at ~$3.2B. Hmmmm…. It’s just 2 months….and it’s only $1B, but this is one of the key indicators I’ve been observing for several years now….looking for early indications of a recession. It doesn’t mean anything at this point, but stay tuned.

US Daily Cash Deficit 1/26/2014

The US Daily Cash Surplus for Monday 1/26/2014 was $9.5B bringing the January 2015 surplus through 26 days to $40B with four business days remaining in the month.

2015-01-26 USDD

Revenues have continued to gain, and are now at +$9B, good for +3% so far. Outlays are about where we left them at $-17B, though they should get about $13B of that back Wednesday with the final SS payments for the month. Putting it all together…as long as I have the timing right, I’d guess we will still end up with a small deficit by month end….$0-$10B or so….

US Daily Cash Deficit 1-21-2014

The US Daily Cash Surplus for Wednesday 1/21/2015 was $18.9B pushing the January 2015 surplus through 21 days to $26B.

2015-01-21 USDD

This was a very good day…The slug of taxes not withheld we’ve been expecting came in at $36B, topping last year’s $29B and finally pushing 2015 revenues past 2014 where it now sits at $+4B. That’s quite a relief…unless you were one of the folks writing those checks….I honestly would not have been surprised to see it go the other way, which would have put us in a hole to start the new year… Instead, we are at ~+2%, despite being down a day….not great, but not too shabby either.

Outlays also pick up a little bit of ground, but are still at $-19B. As discussed previously, most of this is timing…more or less we are flat. Outlays are way less volotile than revenues….so it is probably going to take a few months to see what the growth trend is, but 1-3% is a pretty safe bet. Most of the significant revenue events are now behind us….The MTD surplus will likely bounce around a bit around this level before being more or less wiped out 1/31 as timing pulls a lot of payments due 2/1 forward into January….just like last year. then..it’s on to February….which is likely to post another $200B deficit. Stay tuned…it will only get more interesting from here :)…promise.