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Economy in Brief

U.S. Government Budget Deficit Shrinks in July
by Tom Moeller  August 12, 2020

• Monthly budget deficit pulls fiscal YTD deficit to $2.807 trillion.

• Receipts weaken while outlays surge.

The U.S. Treasury Department reported that the federal government ran a $63.0 billion budget deficit last month, compared to a $119.7 billion deficit twelve months earlier. The deficit's decline largely reflected an inflow of tax payments, delayed due to the coronavirus outbreak. The Action Economics Survey anticipated an $220.0 billion deficit. Since the start of the fiscal year, which began in October, the cumulative deficit increased to $2.807 trillion versus $867 billion one year ago.

So far this fiscal year, the deficit has surpassed the full fiscal year deficit of $984.2 billion set in 2019. The fiscal year-to-date deficit is roughly 15% of GDP.

On a FY basis, federal government outlays have jumped 51.1% so far this year. The increase in outlays was driven by a 148% jump in income security payments that reflected a higher unemployment rate accompanied by payments for the government's Paycheck Protection Plan. Defense outlays grew a lessened 7.1% y/y and health care outlays rose an accelerated 29.3% y/y in FY20. Medicare payment growth jumped to 27.7% y/y.

Overall revenues have fallen 1.3% so far this year. The recession lowered individual income tax receipts by 5.0% y/y. Corporate tax receipts fell a bit more sharply. Growth in social insurance tax payments was stable at 4.9% y/y and the reduction in global economic trade lowered customs duties by 0.6% so far in FY 2020.

Haver's data on Federal Government outlays and receipts as well as CBO forecasts are contained in USECON; detailed data can be found in the GOVFIN database. The Action Economics Forecast Survey numbers are in the AS1REPNA database.

United States Government Finance July FY'19 FY'18 FY'17 FY'16
Budget Balance (Billions) -- $-62.99 $-984.16 $-779.00 $-665.80 $-664.80
Fiscal YTD -- $-2,807.30 -- -- -- --
  As a percent of GDP -- -13.0 -4.6 -3.8 -3.5 -3.2
% of Total (FY 2019)
Net Revenues (Fiscal Year YTD 2020, Y/Y % Change) 100 -1.3 4.0 0.4 1.5 0.6
  Individual Income Taxes 50 -5.0 2.0 6.1 2.7 0.3
  Corporate Income Taxes 7 -6.6 12.5 -31.1 -0.8 -12.9
  Social Insurance Taxes 36 4.9 6.2 0.8 4.2 4.7
  Customs Duties 2 -0.6 71.4 19.4 -0.8 -0.6
Net Outlays  (Fiscal Year YTD 2020, Y/Y % Change) 100 51.1 8.2 3.2 3.3 4.5
  National Defense 15 7.1 8.8 0.1 6.1 0.7
  Health 13 29.3 6.1 9.8 -1.9 6.2
  Medicare 15 27.7 10.6 -1.4 0.6 8.7
  Income Security 12 148.0 4.0 -1.6 -2.1 1.0
  Social Security 23 5.0 5.7 4.5 3.1 3.2
  Veterans Benefits & Services 4 13.3 11.8 1.3 1.2 9.3
  Education, Training, Employment & Social Services 3 44.3 43.8 -34.0 31.6 -10.2
  Interest 8 -9.9 15.7 23.6 9.1 7.8
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