July 2016 Cash Deficit

The US Cash Deficit for July 2016 came in at $101B for July, bringing the 2016 deficit through 7 months to $331B.



Revenue was down again, which of course is not a good sign, but thanks to the way the weekends fell, and July 4 falling on a weekend last year, July 2016 had 3 fewer business days than July 2015. Over the long run, it doesn’t matter so much, but that was always going to be a deep hole to dig out of, and obviously we just didn’t quite make it. Not to worry though, August 2016 gets 2 of them back, which should give us an excellent shot at reporting a healthy (looking) revenue gain in August.


Outlays were down big ($45B) YOY, but most of that was the timing of payments last year that were due in August, but paid in late July due to the way the weekend fell. If you back that out, and the 3 extra business days, the outlays would have been up, probably in the 3-4% range.


Thanks to the timing issue in 2015 that increased cost, the deficit for July was $33B lower than last year, but we should expect that timing event to reverse in August.


Revenue stank, but it was probably just the business days issue. Cost looked good, but was all timing. Not a terrible month, but mostly just pushes our revenue question to next month. Looking forward to August, last year the deficit was $102B…this year I am looking for it to be about $150B as the timing shakes out, and hopefully we see some revenue growth in the 3-5% range.



June 2016 Surplus Recap

Just wanted to add some commentary to the short June post last week. Here is the snapshot again:



Down $16B for the month…Withheld taxes were flat, but corporate taxes were down $12B, for a 16% reduction. Taxes not withheld were down $4B and 6%. For the year,  revenues are down $21B, good for a 1.2% decline.


Outlays were up for the month +2.5% and for the year +3.2%. Social Security, Medicare, and Medicaid continue to dominate the increases


For the month, we ran a surplus, which is great but generally expected in June as quarter end revenues flow in, and have given us June surpluses for 4 years straight. However, the true story can be told in our standard bottom right chart…the YTD deficit, which I have blown up below:


At the midpoint of 2016, it appears that 6 straight years of deficit improvement is likely to be reversed. But where to from here? I hesitate to guess, but there is a good sign, and that is that withheld taxes are up 3.8%, which would indicate rising employment and maybe even higher wages. Offsetting this bright spot is corporate taxes and taxes that were not withheld from paychecks. Those line items being down are certainly negative indicators, but still are dwarfed in magnitude by taxes withheld from paychecks ($1.2T vs $0.5T through 6 months)


It was a bad month and bad first half of the year. Where we go from here will be determined by revenue. Looking at the timing, and putting some one offs behind us, with reported employment numbers looking good, and the stock market at or around record high’s, getting back to 3%+ YOY growth doesn’t sound impossible….fingers crossed.

Looking forward July will return us to deficit territory…last July posted a $133B deficit, though ~$40B of that was timing that was pulled forward cost from August. That should not repeat this year, so I am going to guess we will post an $80B deficit, which assumes a return to 3% revenue growth….stay tuned.


US Cash Surplus June-2016

The US cash surplus for June 2016 came in at $19B compared to a $44B surplus in 2015 due to a decline in revenues and an increase in outlays.


I’m out of town and away from a decent sized monitor, so just a limited post for now. Basically, it was a pretty bad month. Revenue down, outlays up….and the year to date is starting to look ugly too…through 6 months, the deficit is $84B over last year, and revenue is still negative.

US Cash Deficit May 2016

The US cash deficit for May 2016 came in at $86B compared to $107B last May, but the YTD deficit is still up 31% at $249B vs $190B in 2015.


At first glance, it was an OK month…revenue up, outlays down….all good news.


Revenues were up 7%, but I would point out that there was an extra business day, and the timing with the holiday was favorable…pulling that out, we were more or less flat, which is pretty much the revenue story for the year. I would guess this timing hurts the June YOY putting 2016 at a ~$10-$15B disadvantage to last June, but stay tuned… For the year, we have made up some ground, and while still $4B short of last year, let’s just call it flat through 5 months. If we were shooting for 3% growth for the year, we’re going to average nearly 6% here on out…something that is looking quite unlikely in my judgment.


Outlays were down $8B, but about about $40B of payments due May 1 went out April 29 due to the weekend, offset by ~$6B of interest payment timing vs. last year. Pull out timing, and outlays were up ~$26B..some of that is the extra business day, the rest is just overall increases. For the year, we see that outlays at $1.669T are $55B over last year, good for a 3.4% increase.


At $249B through 5 months, 2016 is looking like it will be the year that breaks 6 years of consecutive improvement in the cash deficit. Coming into 2016, I had a very basic assumption…revenue would be up 3%, outlays would be up about 3%, and the deficit would be more or less unchanged. Outlays are running a little over that, but with revenue essentially at 0%, instead of hitting a plateau, the deficit is curving back up. The good news is that withheld taxes are still solid at +3%, but total revenues are being pulled down by unwithheld tax deposits, corporate taxes, and other one time events like 2015’s $35B spectrum auction deposits.


Revenue was a beat, so good news there, and as noted above taxes withheld from paychecks are running at a solid +3% YOY. Assuming there are no more one time issues, revenues should start climbing over 2015…maybe we are on track for 1-2% or so? Outlays continue to come in hot and could be trending closer to 4% than 3% by the end of the year. Put it all together, and 2016 isn’t a disaster, but it does look like the trend has turned against us. Looking forward to June, it is a quarter end, so we should see solid revenues and a healthy surplus say in the $40-$70B ballpark assuming no surprises.

Seeking Alpha Articles

Hey guys, just wanted to point you over to a handful of articles I have written lately and published on other sites. They aren’t specifically deficit related, but there’s a good chance you will find them interesting.

Looking Under The Hood Of The U.S. Oil Market at Seeking Alpha

Building An Income And Cash Model For Chesapeake Energy also at Seeking Alpha

Finally, I revived a series I used to do here over at Talk Markets:

March 2016 Social Security Enrollment Numbers


If you read through the articles, you will see that I have started a new website Excel-Data-Junkies.com. It’s kind of primitive now, and I am primarily using it as a place to post the excel files for the articles I am writing, but there is much more to come. Take a look around and let me know what you think…complaints are more than welcome 🙂