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Economy in Brief

U.S. Budget Surplus Disappoints Expectations
by Tom Moeller  July 11, 2014

The Federal Government posted a $70.5 billion budget surplus during June of FY 2014, disappointing expectations for a $105.0 billion surplus in the Action Economics Forecast Survey. For the first nine months of the current fiscal year, the government ran a $365.9 billion deficit versus $509.8 billion last year. It was the smallest budget deficit during the first nine 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 8.2% y/y with the firmer economy. Corporate income taxes increased 14.3% y/y while the improved labor market raised social insurance taxes by 9.6% y/y. Individual income taxes increased an improved 5.4% y/y but excise taxes declined 2.3% y/y.

The smaller budget deficit in FY'14 also reflects a relatively small 1.1% y/y increase in net outlays versus last year. Outlays were boosted this year by an 11.3% jump in health outlays, which include health services, research & training, as well as an 8.3% increase in veterans benefits. Also to the upside, social security outlays gained 4.6% y/y and Medicare spending grew a firming 1.3% y/y. Reflecting the recent rise in interest rates, net interest payments rose 2.4% y/y. Offsetting these gains was a 5.5% y/y reduction in defense outlays and a 4.1% y/y falloff in income security outlays.

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 June FY'13 FY'12 FY'11 FY'10
Budget Balance -- $70.5 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 8.2% 13.3% 6.4% 6.5% 2.7%
  Individual Income Taxes 47 5.4 16.3 3.7 21.5 -1.8
  Corporate Income Taxes 10 14.3 12.9 33.8 -5.4 38.5
  Social Insurance Taxes 34 9.6 12.1 3.2 -5.3 -2.9
  Excise Taxes 3 -2.3 6.3 9.2 8.2 7.1
Net Outlays (Y/Y % Change) 100 1.1 -2.4 -1.7 4.1 -1.8
  National Defense 18 -5.5 -6.3 -3.9 1.7 4.6
  Health 10 11.3 3.1 -7.0 1.0 10.4
  Medicare 14 1.3 5.5 -2.8 7.5 5.0
  Income Security 16 -4.1 -1.1 -9.1 -4.1 16.7
  Social Security 24 4.6 5.2 5.8 3.4 3.5
  Veterans Benefits 4 8.3 11.5 -2.0 17.3 13.6
  Interest 6 2.4 0.4 -3.0 15.8 2.9
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