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Economy in Brief

U.S. Government Budget Deficit Tops $1 Trillion
by Tom Moeller  September 12, 2019

The U.S. Treasury Department reported that the federal government ran a $1.067 trillion budget deficit during the first 11 months of FY'19. It was the first time in seven years that the deficit was that deep, and compared to an $898.1 billion shortfall during the first 11 months of FY'18. The deficit amounted to roughly 5.0% of GDP compared to 3.9% last year. During August alone, the federal government deficit was $200.3 billion compared to a $214.1 billion shortfall posted one year earlier. A $161.0 billion August deficit had been expected in the Action Economics Forecast Survey.

Growth in tax receipts accelerated. Net revenues rose 3.4% y/y so far this fiscal year compared to a 0.6% y/y gain during in first eleven months of FY'18. Growth in personal income tax receipts slowed to 0.9% y/y so far in FY'19, compared to a 7.0% y/y rise in the first eleven months of FY'18. Growth from other sources picked up the slack. Corporate tax receipts increased 4.5% y/y so far this year after a 30.4% 11-month drop y/y last year. Social insurance receipts rose 6.4% y/y following a 0.5% y/y gain eleven months into FY'18. Excise taxes rose by 10.2% y/y after last year's 8.7% 11-month rise.

Spending growth remained under control compared to last year. Government outlays increased 7.5% y/y so far in FY'19 compared to a 6.7% 11-month rise last year. National defense spending strengthened 8.8% y/y following a 1.6% y/y rise in the first eleven months last year. Medicare outlays rose by 11.1% y/y following an 8.3% 11-month y/y increase last year. Growth in income security payments increased 4.1% y/y so far in FY'19 after a 1.9% gain in the first 11 months of FY'18. Offsetting these accelerations, Social Security payments gained 2.9% y/y after rising 7.4% y/y in the first 11 months of FY'18. Spending growth on health programs nearly halved to 5.5% y/y versus the first 11 months of last fiscal year. Lower interest rates helped growth in interest payments to slow to 14.2% y/y from 21.0% last year.

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 August FY'18 FY'17 FY'16 FY'15
Budget Balance (Billions) -- $-200.3 $-779.0 $-665.8 $-585.6 $-439.1
Fiscal 'YTD -- $-1,067.2 -- -- -- --
  As a percent of GDP -- -- 3.9% 3.5% 3.2% 2.5%
% of Total
Net Revenues (Fiscal Year YTD 2019, Y/Y Change) 100 3.4% 0.4% 1.5% 0.6% 7.6%
  Individual Income Taxes 51 0.9 6.1 2.7 0.3 10.5
  Corporate Income Taxes -- 4.5 -31.1 -0.8 -12.9 7.2
  Social Insurance Taxes 35 6.4 0.8 4.2 4.7 4.1
  Excise Taxes 3 10.2 13.3 -11.8 -3.3 5.3
Net Outlays  (Fiscal Year YTD 2019, Y/Y % Change) 100 7.5 3.2 3.3 4.5 5.3
  National Defense 16 8.8 5.3 6.1 0.7 -2.3
  Health 13 5.5 3.3 -1.9 6.2 17.8
  Medicare 14 11.1 -1.4 0.6 8.7 6.7
  Income Security 12 4.1 -1.6 -2.1 1.0 -0.9
  Social Security 24 2.9 4.5 3.1 3.2 4.4
  Veterans Benefits & Services 4 11.9 1.3 1.2 9.3 6.8
  Education, Training, Employment & Social Services 2 46.6 -34.0 31.6 -10.2 34.7
  Interest 8 14.2 23.6 9.1 7.8 -1.8
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