Budget Deficit

The US Daily Cash Surplus for Tuesday 9/30/2014 was $6.3B bringing the September 2014 surplus to $63B for the full month compared to a $59B surplus in September 2013.

It was an interesting month….Revenues were up 9.5% on solid corporate taxes and excise taxes. Outlays on the other hand were up 10.3%, mostly due to timing that shifted $18B from August to September (compared to last year) but also bonafide growth, including Medicaid up 31%….$6.6B.

GSE dividends….which I’ve been mentioning lately came in at a very dissapointing $5.6B…..compared to 14.6B a year ago and $10.2B just last quarter. My guess….Freddie and Fannie’s accountants are running out of ways to fake income with journal entries. That’s bad news for the deficit because in 2013 Fannie/Freddie contributed about $130B of “revenue to federal coffers. At this pace, 2014 will be lucky to break $40B…..and 2015 could be half that assuming a $5B/quarter pace.

However, despite the GSE disappointment, excise taxes came out of nowhere to save the day from $11B last year nearly doubling to $20B, including $13B over the last two days of the month.

At the end of the day….it was a pretty good month.Revenue….+9.5%, up $33B YOY, and it was solid across the board including taxes withheld, not withheld, corporate and excise taxes, and all despite a pretty big GSE miss. For revenue, this is the best month in the last six. In fact, if we look back to April when the apparent slowdown began, April-August combined ran at only +0.5% good for a $7B YOY gain. Admittedly….this period in 2013 was tainted by Fannie/Freddie payments, but the numbers are legitimate. Compare that to just September at +$33B.

After pulling out timing, outlays were up ~3% or so…which is actually what I would expect typical growth to be, but definitely a divergence from the flat outlays we have seen for the last 4-5 years. So the question I have….is this an anomaly….or are revenues picking back up after a soft patch? Stay tuned!! I don’t have an October forecast finalized yet, but it’s likely to be in the ballpark of $100B…more than enough to wipe out September’s surplus and kick off FY2015 with a bang.

The US Daily Cash Surplus for Monday 9/29/2014 was $12.2B bringing the September 2014 surplus through 29 days to $56B.

At first glance, 2014 appears to have lost a lot of ground, but remember, I adjust based on days of week in an attempt to synchronize 2013 vs 2014 YOY. Last year, Monday 9/30/2014 was the last day of the month….and benefited from a lot of quarter end activity. September 2014 has an extra business day, and ends on a Tuesday…..So tomorrow, 2014 will add both revenues and cost, while 2013 will remain as is…with a $59B surplus. All eyes are really on revenue….we need about $26B to get to +10%….which does not seem unreasonable…..we’ll find out tomorrow.

The US Daily cash deficit for Friday 9/26/2014 was $2.6B bringing the September 2014 surplus to $44B with 2 business days remaining in the month.

Using last year as a guide…we are probably looking at a ~$70B surplus…..last September came in at $59B…

The US Daily Cash Deficit for Thursday 9/25/2014 was $8.9B following Wednesday’s $11.4B deficit bringing the September 2014 surplus to $47B with three business days left in the month.

After dropping off for a few days, Medicaid is back on the map with $3.8B of payments for the day vs ~$1B normal burn rate. That puts them 18% over last September with 3 business days left to pad their stats. Revenues overall are still sitting at 10% with the only material event left on the calender being GSE dividends. It’s looking to be a pretty good month….with revenue gains more than compensating for Medicaid….now if we could just string another 60 or so of these together…

The US Daily Cash Surplus for Tuesday 9/23/2014 was $3.8B following Monday’s $17.1B surplus, pushing the September 2014 Surplus through 23 days to $67B.

Taxes not withheld continue to flow in and have picked up the pace a bit over last year bringing the YOY to +12% good for a $7B pickup so far. Total revenues sit at +11%, a $31B gain and counting. We have 5 business days remaining with the most interesting date being next Tuesday 9/30 where we should get a sizable GSE Dividend from Fannie/Freddie. The size should be interesting….last September, it was almost $15B combined. Last quarter, it was only about $10B. I don’t have a good handle of Fannie and Freddie’s seasonal variation, but another YOY miss would raise some eyebrows on what was starting to look like a reliable $50B+ annual source of cash for Uncle Sam….