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Economy in Brief

U.S. Budget Deficit's Decline Continues
by Tom Moeller  September 11, 2014

The Federal Government posted a $128.7 billion budget deficit during August of FY 2014, and roughly matched expectations in the Action Economics Forecast Survey. For the first eleven months of the current fiscal year, the government ran a $589.2 billion deficit compared to $755.3 billion last year. It was the smallest budget deficit during the first eleven months of any fiscal year since 2008. For FY 2014, the Congressional Budget Office projects the budget deficit will total $506 billion, reduced from its earlier forecast of $583 billion; then it will fall to $469 billion in FY 2015.

Net revenues for this fiscal year-to-date increased 7.7% y/y with the firmer economy. Corporate income taxes increased 14.3% y/y while the improved labor market raised social insurance taxes by 8.4% y/y. Individual income taxes continued to rise an improving 4.9% y/y and excise taxes edged 0.2% higher y/y.

The smaller budget deficit in FY'14 also reflects a reduced 0.8% y/y increase in net outlays versus last year. Outlay growth was held back by a 5.1% y/y reduction in defense spending and a 4.6% y/y decline in income security outlays. To the upside, spending growth was boosted this year by an accelerated 13.0% y/y jump in health outlays, which include health services, research & training, and an 7.9% y/y rise in veterans benefits. Also increasing were social security outlays which gained a stable 4.6% y/y while Medicare spending declined 1.6% y/y. Reflecting the recent rise in interest rates, net interest payments rose 3.9% y/y.

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

An Update to the Budget and Economic Outlook: 2014 to 2024 from the Congressional Budget Office is available here.

 US Government Finance Aug FY'13 FY'12 FY'11 FY'10
Budget Balance -- $-128.7 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 7.7% 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 14.3 12.9 33.8 -5.4 38.5
  Social Insurance Taxes 34 8.4 12.1 3.2 -5.3 -2.9
  Excise Taxes 3 0.2 6.3 9.2 8.2 7.1
Net Outlays (Y/Y % Change) 100 0.8 -2.4 -1.7 4.1 -1.8
  National Defense 18 -5.1 -6.3 -3.9 1.7 4.6
  Education, Training, Employment & Social Services 3 28.6 -21.9 -10.3 -20.6 63.0
  Health 10 13.0 3.1 -7.0 1.0 10.4
  Medicare 14 -1.6 5.5 -2.8 7.5 5.0
  Income Security 16 -4.6 -1.1 -9.1 -4.1 16.7
  Social Security 24 4.6 5.2 5.8 3.4 3.5
  Veterans Benefits 4 7.9 11.5 -2.0 17.3 13.6
  Interest 6 3.9 0.4 -3.0 15.8 2.9
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