US DAILY DEFICIT

The US Daily Cash Deficit for Thursday 7/3/2014 was $30.1B, following a $6.4B surplus on 7/2 and a $38.4B deficit on 7/1. Add them all up and the Deficit through 3 days rings up to $62B….knocking out a big chunk of June’s $78B surplus in only 3 days. Nothing extraordinary about this…most months are heavily front loaded in outlays thanks to Medicare, SS payments, and other monthly outlays that typically go out in the first few days of the month. Still…it’s a bit sobering.

Above is our first chart of the month….with revenues down $8B and outlays flat. Also note that this is completely unadjusted….3 days of 2013 vs. 3 days of 2014….I noted in my forecast post that July was at a bit of a timing disadvantage, and a big part of that is that it started on a Tuesday…which typically has weak revenues, especially compared to July 2013, which started on Monday…which generally has the strongest revenues. Regardless…2014 starts in a hole…and is going to need solid revenue growth for the remainder of the month to dig its way out.

It was just a few days ago that I forecasted a $60B deficit for the entire month…and yet here we are 3 days in at $62B. I’m going to stick to it for now though… In a few weeks the timing should start to even out and if revenue continues to show moderate growth between 5-10%….my forecast should be ok…..if….

Let’s start out with a look back at June where my $85B Surplus forecast was $7B over the actual at $78B. Not too shabby….our model seems to have settled in and is giving us a +/-$10B range….though it is prone to an occasional bust like we saw in April(+55B).

July is a typical Deficit month…last year posting a $90B deficit on $220B of revenues and $310B of outlays. This year, I’m forecasting the July deficit comes in a bit lower at a $60B Deficit on solid revenue gains and outlays being down a bit…primarily timing of interest payments. Of course…the key here is cautiously optimistic revenue growth…if it comes in at 1% my forecast will be a bust.

The US Daily Cash Surplus for Monday 6/30/2014 was $16.2B, following Friday’s $1.5B surplus, and bringing the June 2014 deficit for the full month to $78B for the month.

As you can see… June 2014 surplus falls $38B short of last year with the primary culprit being last June had a special Fannie Mae dividend that pushed total GSE revenues to $66B….compared to only $10B this month. Now, I never expected anything close to last year, but last quarter GSE revenues came in at $18B…so $10B is quite short of expectations. I don’t know if this was a one off, or if the Fannie/Freddie Gravy train is drying up….we’ll know more 9/30 when the next payment is scheduled.

But that aside…the truth is that revenues blew away my expectations… admittedly lowered by 2 months of 1% growth. Taxes withheld were up 13%, taxes not withheld were up 13%, and corporate taxes were up 11%. Some of this was no doubt due to an extra business day and favorable timing, but not all of it. It will be interesting to see how July holds up….as it has a bit of unfavorable timing, though business days stay the same. Anything over 5% would be ok in my book.

Outlays surge at +18B…or +7%. However, $12B of that is timing of interest payments….other than that there are ups and downs across the board, but one really sticks out. Medicaid…up 26% from $21.1B to $26.6B….I would guess driven by Obamacare. For the year…Medicaid is up 14% and +$18B. Lucky for us…all those states decided not to expand Medicaid (yet) or this could be accelerating even faster.

At the end of the day….it was a good month. Revenues handily beat expectations and at least temporarily put to rest the fear that revenues were about to collapse after 2 months of 1% growth. Outlays were up, and while a good chunk of it was timing, it does appear that we are on the cusp of returning to a growth in outlays …over all say 1-3%…but we’re not there yet.

Hopefully more in depth analysis at  later date, but for now…on to July.

The US Daily Cash Deficit for Thursday 6/26/2014 was $4.3B bringing the June 2014 surplus to $61B with 2 business days remaining.

We’ve enjoyed an almost perfectly synced up 2013 vs. 2014 for just about the whole month, but with GSE dividends incoming, and an extra business day for 2014, we are about to see some major divergences over the next 2 days….meaning that the above chart… comparing 6/1/2013-6/27/2013 against 6/1/2014-6/26/2014 is pretty much the closest YOY comparison we are going to get.

Revenues are up $18B so far good for a 6% YOY gain. Our base….taxes withheld from paychecks is solid at +5% so far…not the +10% we saw all last year, but a big improvement over the +1% we saw between April and May. If I were Obama…I’d take +5% all day long. Taxes not withheld are up $6B for an impressive 12% gain. Corporate taxes are also up $6B…good for a 10% gain. I won’t know for sure until the month ends, but I’m guessing that there are some “Other” revenue streams down pulling down the average.

On the outlay side, they are sitting at +$9B, a 4% gain, though $6B of this is due to May interest payments slipping into June. Still….a gain….largely driven by SS, Medicare, and Medicaid which combined look like ~+$12B…with Medicaid being the largest gain….more on that when we get the finals.

The surplus…now at $61B, will likely grow from here as GSE dividends are received Monday, probably pushing us into the ballpark of $80B. We’ll know by Tuesday afternoon where this all ends up, but for now…June looks to be an ok month with the main plus being that the extremely disappointing revenue gains we saw over April and May did not hit a 3 month streak. Outlays look to end up….perhaps marking the beginning of a trend, but it will be many moons before we can confirm that.

Chart Only today…deficit was $9.2B

Enjoy!!