Daily Deficit

The US Daily Cash Deficit for Wednesday 3/12/2014 was $14.0B driven primarily by the second round of SS payments going out in the amount of $12.9B. This brings the March 2014 cash deficit through 12 days to $40B.

My last post was 3/10…..the last 2 days have more or less followed last year’s script, though revenues are up ~2B as are outlays…..netting to zero. Refunds continue to trail last year….down 17% YOY, or about $7B, which explains most of the revenue variance as well. For what it’s worth this early in the month, withheld taxes look solid…..another +10% YOY gain certainly looks possible. No post tomorrow…our next test is going to be corporate taxes. They are due the 15th, but since this is a weekend, we should see them sprinkled between Friday and Monday….so hopefully by Tuesday we’ll have a good idea what they are looking like.

Put it all together, and the $15B forecast I put out earlier in the month still looks good to me. I’m not saying it will be right….just that nothing has happened over the last week of actuals to materially change my outlook.

Light posting this week due to Spring Break, but here’s your chart for 3/10/2014:

The month looks to be shaping up nicely with refunds losing ground to last year and revenues continuing the strong pace we’ve seen through the first 2 months. there is plenty of time left for anything to happen, but no material surprises…yet.

The US Daily Cash Surplus for Wednesday 3/5/2014 was $1.1B bringing the March 2014 cash deficit to $17B through 5 days.

Of note for the day…$2B of taxes not withheld were received….a March daily record going back to 2006…which is as far as my daily records go back. For reference, last March booked $9.5B for the full month, with a max of $1.1B and an average of about $450M. I don’t know if it means anything, or if it’s an anomaly. However, I do have one contact who thinks we are on the verge of having a huge revenue month in April due in part to the tax hikes that went into effect in 2013….and will be fully due April 15th.

I honestly don’t know, but I guess I hope he is correct….it’s not like I’ll be making any huge payments in April… My lizard brain tells me that last April’s 27% YOY revenue spike was a one time event. Seeing another large gain…on top of last year’s already huge number would make my charts look messy….and that makes me sad 🙂 I guess I’ll believe it when I see it.

But that’s why I have been keeping a very close eye on tax deposits not withheld from paychecks. Last year, Jan-March increased about 15% before spiking to +40% in April. This year, through 2 months, we are up 7%….whether or not there is any correlation…we’ll have a better idea by the end of April.

Other than that…kind of a slow news day. Revenue up a bit, tax refunds down a bit. We have to wait until the 15th for a slug of $20-25B or corporate taxes….any divergence from this range would be interesting. Until then…we’ll be keeping an eye on revenues and refunds….I should have a chance to tackle the Social Security Stats for February some time next week….but it is Spring Break….you never know.

The US Daily Cash Deficit for Tuesday 3/4/2014 was $7.3B, adding to Monday 3/3’s $11.2B and pushing the March 2014 cash deficit to $18B through 4 days.

First…I have taken the liberty…as usual to sync up 2014 and 2013 on days of the week. So at this point, we are comparing 2014 3/1 through Tuesday 3/4 to 2014’s 3/1- Tuesday 3/5. This leaves 2013 with an extra business day…. Friday 3/1. Of course, the extra day gives 2013 a head start in both revenues, and costs. 2014 will pick up the business day on Monday 3/31.

Next…timing. March 2014 had about $35B of payments pulled forward…going out February 28 since 3/1 was a weekend. This has happened for a few months in a row now, but will not happen at the end of March, so we will be back in sync after this month. however…all else equal, March 2014 is going to be $35B lower in cost YOY….the offset was back in Jan, so YOY, we are back in sync.

To the charts….it’s really too early to know much….revenue is down due to one less business day. Unless refunds continue to surge like we saw in February, I would expect 2014 to continue to make gains and end up well ahead of 2013.

Outlays are currently down $42B…$35B due to the timing discussed earlier and let’s just assume the difference is the extra day. Assuming outlays will be more or less flat….I don’t expect a lot of movement here until the end of the month when 2014 gets that extra business day back.

As it stands….I would peg the March 2014 cash deficit at $15B thanks to strong revenues, timing, and more or less flat outlays. Refunds are the big wildcard in my mind….they could easily add a +/-20B of volatility.

**Just an update…I haven’t updated it in a while, but I took a look at my forecast accuracy…comparing the projection I typically try to make early in the month to the actual by month end. Going back to December, I had forecasted a $51B surplus…actual was $54B. In January, I forecasted a $25B deficit…the actual was $24B. And then…last month, I forecasted $224B….and sure enough…we ended up at $224B.

Now…I have to admit….the level of accuracy surprised me, and I have to assume that it’s more or less a fluke. If you look closer, there were plenty of misses in each of the ~60 revenue and outlay categories that make up my model…..but they more or less netted out…leaving my overall forecast pretty close to actuals.

I’ll reiterate….I do not expect this trend to continue….there are just too many moving pieces with far too much volatility. And…let’s put this in context….predicting a monthly deficit a month out is probably about the same as predicting the weather the day after tomorrow….odds are it’s going to look a lot like today. Over the long term…I would expect a sustainable accuracy to average +/- $10B. per month…. So…with that all down on record…. it’s probably a safe bet this month’s forecast will be demolished 🙂

The US Daily Cash Deficit for Friday 2/28/2014 was $40.0B bringing the February 2014 Cash Deficit for the full month to $224B vs $229B last year.

It was an interesting month. Outlays were flat…up 1%. We still see declining outlays nearly across the board…except for SS, Medicare and Medicaid….where gains have…at least for this month washed out the reductions elsewhere. Due to timing, I don’t expect this to continue into March, but stay tuned for the rest of the year. Sequestration is just about a year old now, so those YOY reductions are unlikely to impress for much longer.

Revenue was even more interesting. Revenues stayed strong with withheld taxes ending up at +8%. Taxes not withheld were down 11%…but the amount was immaterial at -$652M…not sure that means anything for April or not. Deposits from the Federal Reserve more than doubled from $3.8B to $8.9B….so we have that money printing thing going for us. Offsetting this was tax refunds up $14B YOY at $128B compared to $114B last year. I don’t know if it is just timing or a bonafide 12% surge…we’ll have to wait until the end of April before we really know. And despite this…revenue(net of refunds) still ended up going from $95B last year to $104B, good for a 9% gain. Numerically I suppose that’s not quite as impressive as January’s ~10% climb from $289B to $317B, but a gain is a gain… we’ll take it.

Put it all together, and we have another strong month in the books with revenue clocking in just under +10% and outlays more or less flat. If we keep up this pace we could very well shave another $200B+ off the deficit this year getting us into the $400-$500B range. I’m skeptical….but I’ve been wrong before.