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Economy in Brief

U.S. Budget Deficit Continues to Shrink
by Tom Moeller  June 11, 2014

The Federal Government posted a $130.0 billion budget deficit during May of FY 2014. The latest figure compared to expectations for a $143.9 billion deficit in the Action Economics Forecast Survey. In the first eight months of this fiscal year, the deficit totaled $436.4 billion compared to $626.3 billion last year. It was the smallest budget deficit during the first eight months of any fiscal year since 2008. For FY 2014, the Congressional Budget Office projects the budget deficit will total $492 billion then $469 billion in FY 2015. Thereafter, the deficit is forecast to increase.

Net revenues for this fiscal year-to-date increased 7.5% y/y with the stronger economy. Corporate income taxes increased 15.6% y/y while the improved labor market raised social insurance taxes by 10.1% y/y. Individual income taxes increased a lesser 3.3% y/y but excise taxes declined 2.1% y/y.

The smaller budget deficit in FY'14 also reflects a 2.3% y/y decline in net outlays versus last year. Outlays were led lower by a 5.9% y/y reduction in defense outlays and a 3.9% y/y falloff in income security outlays. Interest payments slipped 0.2% y/y. Working the other way, veterans benefits increased 9.9% y/y and health outlays, which include health services, research & training, increased 9.6% y/y. Also to the upside, social security outlays gained 4.7% y/y and Medicare spending grew 0.8% 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.

 US Government Finance May FY'13 FY'12 FY'11 FY'10
Budget Balance -- $-130.0 bil. $-680.3 bil. $-1,089.2 bil. $-1,296.8 bil. $-1,294.2 bil.
  As a percent of GDP -- -- 4.1 6.8 8.4 8.8
% of Total YTD FY'14
Net Revenues (Y/Y % Change) 100 7.5% 13.3% 6.4% 6.5% 2.7%
  Individual Income Taxes 47 3.3 16.3 3.7 21.5 -1.8
  Corporate Income Taxes 10 15.6 12.9 33.8 -5.4 38.5
  Social Insurance Taxes 34 10.2 12.1 3.2 -5.3 -2.9
  Excise Taxes 3 -2.1 6.3 9.2 8.2 7.1
Net Outlays (Y/Y % Change) 100 -2.3 -2.4 -1.7 4.1 -1.8
  National Defense 18 -5.9 -6.3 -3.9 1.7 4.6
  Health 10 9.6 3.1 -7.0 1.0 10.4
  Medicare 14 0.8 5.5 -2.8 7.5 5.0
  Income Security 16 -3.9 -1.1 -9.1 -4.1 16.7
  Social Security 24 4.7 5.2 5.8 3.4 3.5
  Veterans Benefits 4 9.9 11.5 -2.0 17.3 13.6
  Interest 6 -0.2 0.4 -3.0 15.8 2.9
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