While we await the August final deficit numbers, I thought it would be a good time to take a look at what September has in store for us.
As a quarter end month, we should see some strong revenues around the middle of the month as corporate taxes and taxes not withheld from paychecks are remitted to Treasury. All in, we will likely see about $100B more revenue in September than we did in August, resulting in a monthly surplus of about $70B, though this is still using some pretty healthy YOY revenue assumptions more in line with what we saw in the first half of the year. Given that the last two months have shown a marked decline from those initial rates, this $70B surplus could be a bit optimistic if we continue to see sub 10% YOY revenue growth.
On the outlays side, against the backdrop of sequestration, we would typically expect a 2% or so decrease in outlays…primarily from defense vendors. However, September 2012 managed to push $25B of SS outlays into late August…September 2013 will not have this benefit, and thus, we will probably end up seeing higher YOY outlays over the month as reductions in outlays will not be large enough to offset the timing issues.
For reference, September 2012 posted a $58B surplus, so within the margin of error of what I am projecting for September 2013. The key here, as it has been for most of the year is to keep our eyes on revenues, which could range from +5 to +20%. Outlays are far more stable (and predictable)…adjusting for timing, they will probably be down a few%. We should know by about 9/21 how the revenue story is shaping up… Stay tuned!!