Budget Deficit

The US Daily Surplus for 4/18/2013 was $13.6B…in short, the cash continues to pour in. The fat lady hasn’t sang yet, but there is no denying that total net revenues are now up 20% over last April. Assuming everything just evened out tomorrow, we would end the month with a $80B surplus. If this pace continues, topping $100B+ certainly seems well within reach.

All that said, I have to admit the revenues have surprised me…I had 12% penciled in…we are sitting at 20% and gaining daily it seems. However, I just want to be clear….these suprising and positive developments we have seen over the last couple of weeks in no way shape or form mean we are saved, out of the woods, or even close to having materially fixed any of our problems. Let’s say we end up at a $120B surplus…double last year. We are still talking about a $60B improvement in a $1,000B hole. Six months into the 2013 fiscal year, which had a $1.092T deficit, we have seen an $82B improvement, with a strong push lets say we get down to $900B. That’s still a $900B annual deficit…how do you get it to zero?  While this month’s strong revenues are likely being driven by the 2013 tax hikes, moderately higher employment, and a pretty big run up in the stock market (until the last week or so)…seeing 10% + revenue growth again next year seems unlikely…without additional tax hikes, they should grow at roughly the rate of the economy.

So..to wrap this up…we are having a relatively good month…Hooray for us!! Just remember, this is a few weeks of data points in the vast economic ocean. If we are still seeing 20%+ revenue growth in 6 months (or even 3)…I’ll be happily pointing that out to the world….but in the meantime, I’m not holding my breath.

The US Daily Surplus for 4/17/2013 was $5.6B bringing the April 2013 surplus through 17 days to $14B, now $9B better than 2012. Revenues continue to outpace 2012 by a large margin, and are now showing a 17% YOY improvement for April. Outlays, adjusted for timing do appear to be down a little, which we would expect given the ongoing “sequester”.

It now appears likely that 4/2013 will exceed last April’s $59B surplus and become the largest surplus recorded since 4/2008, when we posted a $188B surplus….Of course I think we all remember how that ended up…just a few months later, the deficit started to explode as revenues started falling and outlays started ballooning into the “great recession”. I’m not predicting that, but given the news cycle and the recent stock market nose dives, I don’t think it would shock anybody. I just thought it was a little eery…here’s the revenue chart for 2006-2013 trailing twelve month cash revenues.

You will probably need to click to enlarge, but the peak we see in 2008 is April…from there almost straight downhill. Still…you have to admit, a nice recovery starting in 2011 through today…do note that the April 2013 forward are forecasted.

The US Daily Cash Surplus for 4/16/2013 was $24.4B pushing April 2013 to a surplus of $8B, now $1B ahead of last year through the same number of business days. Strong revenues is the big story here with the haul over the last two days exceeding the same period last year by $19B. Looking at the month to date, net revenue is up $24B, good for a 14% increase. Corporate tax deposits are up 27%, and tax deposits not withheld are up 25%.

Surprisingly, tax deposits withheld are only up 2%, which is a trend we saw earlier in the month as well. If that doesn’t end the month a lot closer to 10%, it could be a red flag that part of the sizable revenue increases we have seen in 2013 are not sustainable, and are just a one time spike caused by income being pulled into 2012 to avoid the 2013 tax hikes. The test will be May-June, which are far enough away from 2012 and tax season that we should be able to use them as our first clear YOY snapshot. If we still see across the board revenue increases over 11%-12% in May-June, it would provide some indication that at least for now, the 2013 tax hikes have some staying power. If instead we see a steep dropoff, watch out, because the CBO is projecting 11-12% annual revenue growth for 2013-2015. If they are wrong, every forecast you’ve heard from both sides of the aisle about deficit reduction over the last few months can be junked.

The US Daily Cash Surplus for 4/12/2013 was a not so shabby $7.7B. Still no major divergences from 2012…if it’s gonna happen we should see it this week. (15-19th). Using last year as a guide, we could see a weekly surplus in the $70B range, completely wiping out the current April deficit of $65B through 12 days.