US Daily Cash Deficit 4/8/2015

The US Daily Cash Deficit for Wednesday 4/8/2015 was $11.3B bringing the April 2015 deficit through 8 days to $65B.

2015-04-08 USDD

2015 and 2014 are still roughly aligned…nothing so far to suggest a revenue surprise is on the way in either direction.

I have barely heard a peep on the debt limit issue over the last few weeks, but thought it was worth noting that through 24 days of “Extrordinary Measures” (EM), the apparent value of the “missing” debt is about $51B. I don’t know exactly how much cash they can generate in this fashion, but I’d guess ~350B total. The current cash balance is $44B, so add to that another $300B of EM, and $200B for the surplus we are likely to run over the remainder of the month, and we have nearly a $550B cushion remaining before Uncle Sam for real runs out of cash. Assuming current run rates….I think that gets us to next February…which is probably when this will get resolved .

US Daily Cash Deficit 4/3/2015

The US Daily Cash Deficit for Friday 4/3/2015 was $23.1B bringing the April 2015 deficit to $57B through 3 days.

2015-04-03 USDD

No surprises yet…Most months start off with a pretty big deficit since a lot of outlays go out between the 1st and 3rd, including the first round of Social Security on the 3rd at about $24B and a ~$20B Medicaid payment that typically goes out on the 1st.  As it standard practice, I am synchronizing 2015 and 2014 on days of the week, so our charts are comparing 4 days of April 2014(Tuesday 4/1/2014-Friday 4/4/2014) to 3 days of 2015 (Wednesday 4/1-Friday 4/3). This won’t help us as much as it usually does, as it is calendar 4/15 that triggers corporate and unwithheld taxes, but we’ll stick with it anyways because it should keep SS payments and withheld taxes more or less in sync. 2015 will get the extra day back at the end of the month… Thursday 4/30.

Despite the difference in days, revenues are all tied up and outlays are down just $4B. The deficit should trend up a bit over the next week, then on 4/15, a flood of revenues should start flowing in pushing us to Surplus by the end of next week, and somewhere between $100B-$200B by the end of the month. My guess is officially $155B surplus, but it all depends on revenues.

 

US Daily Cash Deficit March 2015

The United States Cash Deficit for March 2015 came in at $16B compared to March 2014 which came in at $25B using the same methodology. Do recall I had to adjust the math this month due to “Extraordinary Measures”(EM). This methodology attempts to isolate EM, but also ignores discounts and premiums on newly issued debt. Using our standard methodology, March 2014 had a $31B deficit, so $6B higher. Once EM is over…in 6-12 months (hopefully sooner) , I will be able to true up the true cash deficit over this time period, but for now, this will have to do.

2015-03-31 USDD

 

REVENUE:

Revenue started out as the big story of the month as we kicked off March with $35B of additional revenue from the FCC spectrum auction. Sure enough, March 2015 ended up with revenue $38B higher than 2014, but that’s not the whole story. Offsetting this windfall, GSE dividends (Fannie/Freddie) were down big from $17.6B last March to just $2.8B this March. This is the lowest I’ve observed, with December 2011 at $4.3B being the next lowest, and June 2013 the highest at $66.3B…one has to wonder….will this revenue source completely dry up, and maybe even go negative over the next year? Nah…. Other than that, we had bonafide revenue growth where it counts…withheld taxes (up 6.8%) and corporate taxes(up 12.9%) , giving us a solid baseline at ~+8% for the month, though the extra day certainly helped that a bit. For the year, this baseline is a bit under 5%…good, but not as good as years past.

Outlays:

Outlays were up a fairly big amount for the month at +11% and $29B. $6B of that was expected interest timing. The rest can be mainly attributed to our big 3…Medicare, Medicaid, and Social Security, up $14.5B between them, up 12%. The rest was scattered over multiple categories. This puts us at +4.5% for the year, and while granted our methodology is a little different than last month when we were pretty much flat, this is not a good development through 3 full months of 2015.

Deficit:

For the Year, the deficit stands at $263B…$10B under last year. That’s not impressive but it is improvement, so of course we’ll take it.

Refunds:

Refunds are a big part of February and March cash flows, and there was some thought that Obamacare would spoil tax refund season for those who had conveniently underestimated income to recieve bigger subsidies. That may be the case, but 2014/2015 individual refunds are just about tied with last year both YTD and for the month. 2015 YTD is at $198.8B…2014 was at $198.4B. Business tax refunds have nearly doubled from $12B to $21B on the year, but are still way under 2010’s $42B through 3 months.

Forecast:

March was not my best showing…I guess I let my optimism 🙂 get the best of me forecasting a $5B surplus, but marginally lower revenues and higher outlays sunk me, leaving me with a $21B miss to follow February’s $1B miss. Oh well…my average is still around $10B. Moving forward, April is notoriously unpredictable. Last April, I missed by $55B….optimistically predicting a $180B surplus vs. an actual surplus of $125B. So…fully aware this may be a swing and a miss, I’m going to assume we get ~8% revenue growth in both withheld and not withheld taxes, while outlays are up ~3% overall. Pencil that out, and I’m down for a $155B surplus for the month of April.

Summary:

It was another good month, even if most of that was due to the spectrum auction. I know everyone is talking about popping bubbles and doom and gloom, but for the time being, government revenues continue to grow at a fairly steady pace. Granted, things can change quickly, but as of the end of March we are still pushing forward with 5+ years of fairly impressive revenue growth. When/If things go south, I should see it in real time (not saying this is a leading indicator…just saying we’ll see it).

Sit back and enjoy the show!!

US Daily Cash Deficit 3/30/2015

The US Daily Cash Surplus for Monday 3/30/2015 was $6.6B bringing the March 2015 Deficit through 30 days to $11B

2014-03-30USDD

I finally had a chance to rig up some new charts….let’s walk through the disclaimers. First off…as discussed in earlier posts….Treasury deploying “Extrordinary Measures”(EM) nukes my old process. Essentially…they take debt off of the balance sheet and pretend like it doesn’t exist. So…what happens when they use their magic want to make say $10B disappear? Well…every accounting entry has an offsetting entry, and this one pops up as a $10B surplus….except that it’s fake. I can roughly back out this effect, but will need to true it up once the debt limit is raised and EM are all brought back on the balance sheet. I would guess this adds a $5-10B margin of error per month…probably on the lower end, but who knows..

So here we go. Revenues look great…+$63B and +30%. Of course…$35B of that was from the FCC spectrum auction. Still…not too shabby, though I think 3/31 revenue will be down quite a bit YOY on dissapointing Freddie/Fannie payments….pulling us back down a bit for the full month from where we are today, but it will still go down as a great revenue month.

Outlays are sitting at $+29B. $6B of this is interest timing, and another $10B is the extra day March 2015 has over March 2014. That leaves $13B of bonafide growth….$8B or so looks like Medicaid, which ended 2014 at $23B but looks to end March 2015 at around $31B. If that sticks, Medicaid growth for the first quarter of 2015 is going to be up about 22% over 1Q 2014, and 40% over 1Q 2013. I had expected that growth rate to temper a bit this year, but it’s actually a little higher than last year.

And finally, the deficit at $11B is more or less in line with expectations, but a little worse than my initial forecast at a $5B surplus. Last March ended up with a $31B deficit, so we will definitely end up better than that….if that’s a victory, we’ll take it.

 

US Daily Cash Deficit 3/20/2015

I’ve been away for a week, so lets take a look back for a recap. Friday 3/13 posted a $6.5B surplus, followed by a nearly $50B surplus on Monday on strong tax deposits. This wasn’t unexpected….last year Monday 3/17 posted a $44B surplus. Since Monday, inclusive of Friday 3/20, we ran $26B of deficit. So now we’re back up to speed….just one problem….the Debt Limit, which was set 3/15 at  $18.113B.

The basic methodology for calculating the cash deficit is to look at the change in cash and external debt. When Treasury employs “Extrordinary Measures”(EM) it is essentially taking certain types of debt owed off the balance sheet, and pretending like they no longer exist. In 2013, over a ~6 month period, they hid $328B in this fashion, allowing them to issue new debt in the meantime, before bringing it all back on the balance sheet once the debt limit was raised. This kind of nukes my basic calculation….for example, Tuesday 3/17…Treasury issued $1.120B of new debt, and redeemed $0.935B. Quick math tells us that external debt should rise about $185M. However, what actually happened was that public debt outstanding decreased by $10.6B….That’s “EM” in a nutshell. Take 10.6B…pretend it doesn’t exist, and replace it with new debt. In this case it happened to be replaced with Intragovernmental debt, which I tend to ignore anyway, but it could have just as easily been $10B of fresh new 30 year bonds.

Long story short, this nukes my calculations in the short run until EM is over, at which point I can figure out the true deficit over the affected period. But don’t fret….I won’t be on hiatus until then. What I will do is back into the EM, and from there calculate a deficit figure. It will have a larger margin of error, maybe $500M+/- per day, and maybe $5-10B over the month….I won’t know for sure until the debt limit is raised or dropped again(which could be next year!!) Sorry…no charts today…I have the additional fields ready to go, but have not reconfigured the charts….hopefully later this week if not tomorrow. I can say that the March 2015 Surplus through 20 days is sitting at $13B. EM is at ~$22B so far, and revenues are looking solid even after pulling out the FCC revenue. My initial forecast of a $5B surplus is still looking pretty solid.