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Economy in Brief

U.S. Budget Surplus Emerges as Medicare and Defense Payments Decline
by Tom Moeller  July 11, 2013

The Federal Government ran a $116.5B budget surplus during June of FY'13. During June of last year, the government ran a $59.7B deficit. The 2013 figure compared to consensus expectations for a $40.0B surplus. So far this fiscal year the deficit totaled $509.8B, nearly half the $904.2B during the first nine months of FY'12.

Driving the improvement in June's budget balance was a 49.4% m/m decline in net outlays. Year-to-date outlays thus fell 4.8% versus 2012. Behind these declines was a nearly two-thirds m/m drop in Medicare spending that left YTD spending up a minimal 1.5% versus last year. National defense spending also dropped nearly one-quarter m/m pulling year-to-date outlays 6.6% below last year. The improved economy dropped YTD income security payments 2.2% below last year. Also to the downside were net interest payments by 3.9%. A 5.3% YTD increase in social security outlays as well as a 2.6% rise in health spending countered these declines. In addition, veterans benefits gained 6.8%.    

An improved economy raised revenues a strong 14.4% so far this fiscal year versus last. That reflected an 18.0% y/y gain in individual income taxes and a 16.9% y/y rise in corporate income tax payments. Social insurance receipts jumped an accelerated 11.2% y/y while excise taxes grew 6.6% y/y.

Haver's basic data on Federal Government outlays and receipts, and summary presentations of the Budget from both OMB and CBO are contained in USECON. Considerable detail is given in the separate GOVFIN database.

Debt Overhang: Why Recovery from a Financial Crisis Can Be Slow from the Federal Reserve Bank of Philadelphia is available here.

 US Government Finance June FY'12 FY'11 FY'10 FY'09
Budget Balance -- $116.5B $-1,089B $-1,298.7B $-1,294.2B $-1,415.7B
  As a percent of GDP -- -- 7.0 8.6 8.0 9.5
% of Total YTD FY'13
Net Revenues (Y/Y % Change) 100 14.4% 6.4% 6.5% 2.7% -16.6%
  Individual Income Taxes 47 18.0 3.7 21.5 -1.8 -20.1
  Corporate Income Taxes 8 16.9 33.8 -5.4 38.5 -54.6
  Social Insurance Taxes 36 11.2 3.2 -5.3 -2.9 -1.0
  Excise Taxes 3 6.6 9.2 8.2 7.1 -7.2
Net Outlays (Y/Y % Change) 100 -4.8 -1.7 4.1 -1.8 18.2
  National Defense 20 -6.6 -3.6 1.7 4.6 7.6
  Health 10 2.6 -7.0 1.0 10.4 19.1
  Medicare 20 1.5 -2.8 7.5 5.0 10.1
  Income Security 17 -2.2 -9.2 -4.1 16.7 24.9
  Social Security 20 5.3 5.8 3.4 3.5 10.7
  Veterans Benefits 4 6.8 -2.0 17.3 13.6 12.7
  Interest 6 -3.9 -2.1 15.8 2.9 -24.6
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