copernicus

The US Cash Surplus for April 2016 came in at $109B, far short of last April’s $174B surplus.

Revenues:

April, not surprisingly is the largest month for revenues as most of the refunds have gone out in February and March, and those who owe taxes for the prior year must pay them in April. Revenue this April was still healthy coming in at $454B, but was down $28B compared to April 2015. Most of the variance was in “Taxes Not Withheld” which was down $26B from $219B last year to $193B in 2016. Obviously, a revenue miss isn’t a good sign, and now being down for the year with 1/3 of it in the bank, it is looking increasingly unlikely we will see ~3% YOY gains in 2016 without some help from some one time items.  For me, the big question is…was April 2015, with a +13% YOY gain just a one off that was always going to be impossible to repeat, or is this miss just another in a growing string of dissapointments? The one revenue highlight I can point to is that taxes withheld from paychecks is up 3.3% for the year. It’s not going to break any records, but I like seeing a nice solid number in that relatively stable revenue source, even if we are seeing disappointing numbers elsewhere. If nothing else, we have more people working, making more salary compared to last year. I won’t comment on the quality of those jobs, but hey…3%+ growth with 1% population growth and supposedly flat inflation isn’t nothing..

Outlays:

Outlays came in at $345B vs $309 last year, but about $40B of that increase was timing as payments due Sunday May 1 were paid Friday April 29 due to the weekend. So mostly flat for the month if we take that out, but the year is nearly at +5%. That comes down a bit if we take out this timing event, but the truth is thanks to a similar event in December 2015 that pulled $ out of 2016 and into 2015, this is actually a decent YOY comparison point. The increases are where we have come to expect them…Social Security, Medicare, and Medicaid.

Deficit:

We got our healthy surplus in April as expected, even if it was a bit lower than expected. However, for the year, with revenues down about 1.5%, and outlays up nearly 5%, the deficit through 4 months now sits at $163B, $80B higher than 2015 and pretty much on track with 2014. There are 8 months left, and of course anything can happen, but it is starting to look like 2016 is the year that ends the 6 year streak of deficit improvement.

Looking forward, last year May posted a $100B deficit, and this year shouldn’t be too far off of that, though it will have the advantage of dumping $40B of its cost into April. There is one extra business day, so I’ll throw a dart and say $80B deficit for May with June hitting a $50B surplus. Stay tuned!!

The US Cash Deficit for March came in at $98B easily topping last March’s $18B deficit and bringing the 2016 YTD deficit to $272B.

Revenue:

Revenue was down $35B from last year, which had a $35B inflow from the wireless spectrum auction. So all together flat, with some increases and decreases cancelling each other out. For the year, revenue is up a meager 1%, but the $35B spectum auction is a material piece of that disappointing increase, and looking at other revenue sources, through 3 months it looks like we may have a baseline growth of 2%-3%. April will keep it interesting…could be a big hit or miss…Seems like you never know until the end of the month though the flood of receipts should start picking up around mid month.

Outlays:

Outlays were up $46B, but most of that looks to be timing rolling off from last month. For the year, we are at +2.5% which looks ok, but I still feel like the baseline is a little higher… if we add back in some year end timing it’s closer to +5%. 4% feels about right, but we should have a better feel for it after a few more months.

Deficit:

The $98B deficit looks high, but it’s not as bad as it looks due to the timing and one time reciepts recieved last year. Still…it’s not good…through 3 months the deficit is trending higher year over year for the first time since 2011. There is still plenty of time left to keep the annual trend intact,

Summary:

All together, through 3 months, all things considered, 2016 is looking pretty flat to 2015. The good news is that revenues are increasing….if at the slowest rate we’ve seen in a while, but at least they aren’t decreasing…or worse crashing. Outlays are also trending up, and even if it is only at ~4%, when your base is about 3.5 Trillion of annual spending….4% can become a pretty big problem after just a few years. If I had to guess, 2016 will be plateau year with the annual deficit staying pretty close to 2015 before heading back up in 2017…just in time for whoever our next President is to take office. Stay tuned for April…it should be a solid surplus in the $150B-$200B ballpark absent anything crazy  happening.

The US Daily Cash Deficit for Thursday 3/10/2016 was $5.9B bringing the March 2016 deficit through 10 days to $92B.

Revenue looks down big….you may recall that last March received about $35B of additional revenue thanks to the FCC wireless spectrum auction. There is another one planned in 2016 at the end of the month, but it is unlikely the cash will be in hand until a few months after that. I saw one article that forecasted this auction will be even larger….in the $60B ballpark….guess we’ll just have to wait and see. Regardless, March 2016 is likely to come up short of last year by a large margin unless Treasury can pull a $35B rabbit out of their hat. In fact, without that FCC revenue, 2016 is currently down for the full year, but by less that $35B so there is at least some baseline growth for now. Outlays, with timing mostly flushed out are back over 2015 levels despite the ~35B YOY timing…suggesting healthy baseline growth here as well. When we kicked off the year, I assumed we would see 3% growth in both revenue and outlays. For now…it is looking like revenue is running a little under this and outlays are a little over. That’s not exactly a recipe for budgetary success, but it’s been way worse. Stay tuned…April could get interesting.