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Economy in Brief

U.S. Government Budget Deficit Deepens to the Largest in Six Years
by Tom Moeller  October 15, 2018

The U.S. Treasury Department reported that during FY'18, the federal government ran a $779.0 billion budget versus a $665.8 billion deficit in FY'17. It was the largest deficit since 2012 and amounted to 3.9% of GDP, up from 3.5% in FY'17. For the month of September the federal government actually ran a $119.1 billion surplus, which made little dent in the annual figure. A $78 billion September surplus had been expected in the Action Economics Forecast Survey.

Net revenues increased 0.4% y/y in FY'18 after a 1.5% rise in FY'17. The gain was held back by a roughly one-third decline in corporate income tax receipts, due to the recently enacted tax cut, following last fiscal year's 0.8% decline. Individual income taxes increased 6.1% y/y as employment continued to improve, compared to a 2.7% rise during all of FY'17. Social insurance receipts rose 0.8% y/y following last year's 4.2% rise, and excise taxes improved 14.3% y/y after last year's 11.8% decline.

Government spending increased 3.2% y/y in FY'18, about the same as FY'17. National defense spending rose 5.3% y/y after a 6.1% rise. Health insurance spending increased 3.3% following a 1.9% shortfall. Medicare outlays declined 1.4% y/y following a negligible increase in FY'17. Growth in income security payments declined 1.6% y/y with rising job levels. Social Security payments rose an accelerated 4.5% y/y. Interest payments increased by roughly one-quarter y/y with the larger deficit.

Haver's data on Federal Government outlays and receipts are contained in USECON. Considerable detail is given in the separate GOVFIN database. The Action Economics Forecast Survey numbers are in the AS1REPNA database.

United States Government Finance FY'18 FY'17 FY'16 FY'15 FY'14
Budget Balance (Billions) -- $-779.0 $-665.8 $-585.6 $-439.1 $-483.4
  As a percent of GDP -- 3.9% 3.5% 3.2% 2.5% 2.8%
% of Total
Net Revenues (Fiscal Year YTD 2018, Y/Y % Change) 100 0.4 1.5% 0.6% 7.6% 8.9%
  Individual Income Taxes 51 6.1 2.7 0.3 10.5 5.9
  Corporate Income Taxes -- -31.1 -0.8 -12.9 7.2 17.3
  Social Insurance Taxes 35 0.8 4.2 4.7 4.1 8.0
  Excise Taxes 3 14.3 -11.8 -3.3 5.3 11.1
Net Outlays  (Fiscal Year 2017 YTD, Y/Y % Change) 100 3.2 3.3 4.5 5.3 1.4
  National Defense 16 5.3 6.1 0.7 -2.3 -4.7
  Health 13 3.3 -1.9 6.2 17.8 14.3
  Medicare 14 -1.4 0.6 8.7 6.7 2.8
  Income Security 12 -1.6 -2.1 1.0 -0.9 -4.3
  Social Security 24 4.5 3.1 3.2 4.4 4.5
  Veterans Benefits & Services 4 1.3 1.2 9.3 6.8 7.7
  Education, Training, Employment & Social Services 2 -34.0 31.6 -10.2 34.7 25.9
  Interest 8 23.6 9.1 7.8 -1.8 2.8
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