Budget Deficit

The US Daily Cash Surplus for Monday 1/6/2014 was $5.0B bringing the January 2014 deficit through 6 days to $21B.

For the day…that is comparing Monday 1/6/2014 to Monday 1/7/2013…revenues were up $1B and outlays were down about $2B. Honestly it’s still too early to tell much of anything, but just for fun I looked at the “Cash Federal Tax Deposits” category on the DTS which makes up 75% of all cash revenues and compared 1/6/2014 to 1/7/2013 thinking that these days should be about as clean cut a YOY comparison as I’m ever going to get. Yesterday came in at $11.824B vs $11.564B last year. ….good for a 2.2% increase…not much better than the increase in employment at 1.7% per my math. What does it mean?? Nothing yet…it’s one day out of ~250 or so. However, this is a key revenue stream I will be tracking in 2014. In total, the CBO is expecting FY 2014 revenues to be nearly +10% (they don’t forecast calendar years)…so we had better all hope this 2% is just a fluke.

Hello 2014!! The US Daily Cash Deficit for Friday 1/3/2014 was $26.5B…less a $0.2B surplus on 1/2/2014 leaves us with a $26B deficit for January with 3 days under our belt.  Don’t fret though…January is likely to be a light deficit month thanks to January tax payments flowing in…I hesitate to guess because I have a high degree of uncertainty about YOY revenues…it is probably going to take a month or two to re-calibrate expectations. If we assume revenues gain ~5-7% and outlays only grow at a 2% rate….a $25B deficit for the month looks about right. If, however we see revenues collapse…or spike…this could end up being a huge miss.

Above are the charts…now honestly it’s too early in the month to really start looking at the YOY….mainly I want to discuss timing and the adjustments I will make to sync up 2013 and 2014 for the rest of the month. Recall…different revenue and outlay streams are driven by different variables. Social Security, for example is paid out in 4 big chunks with one being on the 3rd of the month, and the remaining 3 being on the 2nd-4th Wednesdays of the month. Some, on the other hand are driven simply by business days…being more or less flat throughout the month. While there is no perfect way to do it, I prefer to sync up on days of the week, which usually syncs up Social Security as well as tax deposits, which seem to be strongest on Mondays, followed by Wednesday and Friday which have moderate revenues, while Tuesday and Thursday are generally weak.

So…for January, I will be syncing up by adding one day to 2013…thus the chart above compares January 2014 Thursday 1/2 and Friday 1/3 to January 2013’s Wednesday 1/2 through Friday 1/4…This pattern will continue for most of the month….so tomorrow I will add Monday 1/6/2014 and Monday 1/7/2013. Now the obvious flaw for now is that 2013 has an extra business day…and thus higher revenues and outlays. This should work its way out over the course of the month…just remember that on revenues…we are starting at -$9B…this early in the month…don’t be too concerned about the number itself…but which direction it is heading.

The US Daily Cash Surplus for 12/31/2013 was $21.4B pushing the December 2013 surplus to $54B, and the 2013 full year cash deficit to $660B. As expected, revenues were strong led by $39B of GSE dividends…including the $25B related to Fannie’s pretend tax assets. Outlays were also strong as $6B of interest was due and a slew of payments that typically go out on the first of the month were pulled into December with 1/1 being a holiday…..of course this happens every year, so it doesn’t really cause a timing variance.

I’ll have a more detailed 2013 post up in a week or so, but the bottom line is that 2013 was an impressive year, with revenues up 14% and outlays down 1%…good for a $436B improvement from $1.096T in 2012 down to $660B in 2013…the first sub $1T deficit since 2008.

The US Daily Cash Surplus for Monday 12/30/2013 was $14.8B. bringing the December cash surplus through 30 days to $33B.

Looking at the chart remember we have synced up 2013 and 2012 on days of the week….we are comparing December 2013 through Monday 12/30 to all of December 2012…which ended on a Monday and has one fewer business day than 2013. The timing scrambles things up a bit, but expect large outlays 12/31 and even larger revenues…pushing both over 2012 levels and pushing the surplus north of $50B. Then…it’s on to 2014!!

The US Daily Cash Surplus for Friday 11/27/2013 was $6.1B bringing the December 2013 surplus through 27 days to $18B and likely headed to $50B+ once Freddie Mac’s $30B New Year’s present is delivered tomorrow afternoon.

Taxes withheld are up 2% YOY, taxes non withheld are up 4%, and corporate taxes are up 4%. Not terrible numbers, but not good enough if your expectation is +10%. Overall revenues are down 3%….a number that will no doubt reverse once the Freddie check clears….which is fine, but don’t expect a repeat next year…or the next…or the next. Between Fannie and Freddie, we are looking at about $75B of phantom 2013 revenues…and that’s just related to the write up of their faux tax assets.

It looks like 2013 cash revenues are likely to come in at around $3.150T…inclusive of the $75B from Fannie/Freddie write up of deferred tax assets. I’m assuming that wad is spent….and will not repeat in 2014. Now…just for revenue to get back to break even for 2014, you need 2.4% across the board growth….which is more or less what the economy is supposedly growing at.  Clearly…anything is possible, and I missed this by about $200B last year, but I’m quite skeptical we get anywhere close to 10% YOY revenue growth in 2014.