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Economy in Brief

U.S. Budget Deficit's Decline Is Near Expectations
by Tom Moeller  August 12, 2014

The Federal Government posted a $94.6 billion budget deficit during July of FY 2014, and roughly matched expectations in the Action Economics Forecast Survey. For the first ten months of the current fiscal year, the government ran a $460.5 billion deficit compared to $607.4 billion last year. It was the smallest budget deficit during the first ten months of any fiscal year since 2008. For FY 2014, the Office of Management & Budget projects the budget deficit will total $583 billion then $525 billion in FY 2015.

Net revenues for this fiscal year-to-date increased 8.0% y/y with the firmer economy. Corporate income taxes increased 14.4% y/y while the improved labor market raised social insurance taxes by 9.0% y/y. Individual income taxes increased an improved 4.9% y/y but excise taxes declined 1.0% y/y.

The smaller budget deficit in FY'14 also reflects an easier 1.2% y/y increase in net outlays versus last year. Outlay growth was held back by a 5.5% y/y reduction in defense outlays and a 4.4% y/y decline in income security outlays. To the upside, spending growth was boosted this year by an accelerated 13.5% y/y jump in health outlays, which include health services, research & training, and an 8.1% y/y rise in veterans benefits. Also increasing were social security outlays which gained a stable 4.6% y/y while Medicare spending grew a firming 1.8% y/y. Reflecting the recent rise in interest rates, net interest payments rose 3.1% 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 July FY'13 FY'12 FY'11 FY'10
Budget Balance -- $-94.6 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 8.0% 13.3% 6.4% 6.5% 2.7%
  Individual Income Taxes 47 4.9 16.3 3.7 21.5 -1.8
  Corporate Income Taxes 10 14.4 12.9 33.8 -5.4 38.5
  Social Insurance Taxes 34 9.0 12.1 3.2 -5.3 -2.9
  Excise Taxes 3 -1.0 6.3 9.2 8.2 7.1
Net Outlays (Y/Y % Change) 100 1.2 -2.4 -1.7 4.1 -1.8
  National Defense 18 -5.5 -6.3 -3.9 1.7 4.6
  Health 10 13.5 3.1 -7.0 1.0 10.4
  Medicare 14 1.8 5.5 -2.8 7.5 5.0
  Income Security 16 -4.4 -1.1 -9.1 -4.1 16.7
  Social Security 24 4.6 5.2 5.8 3.4 3.5
  Veterans Benefits 4 8.1 11.5 -2.0 17.3 13.6
  Interest 6 3.1 0.4 -3.0 15.8 2.9
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