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Economy in Brief

U.S. Government Budget Deficit Widens Sharply
by Tom Moeller  September 14, 2018

Faster growth in spending and a lessened increase in revenues is a sure formula for widening the budget deficit. The U.S. Treasury Department reported that during August, the federal government ran a $$214.1 billion budget deficit, double the deficit in August 2017. A $166 billion deficit had been expected in the Action Economics Forecast Survey. During the first eleven months of fiscal year 2018, the federal government budget deficit totaled $898.1 billion, up one-third from $673.7 billion in the first eleven months of FY'17. 

Government spending has increased 6.7% y/y so far in FY'18 compared to 3.3% growth during all of FY'17. Spending accelerated in most categories. National defense spending rose 6.8% y/y after minimal increases during the last two fiscal years. Medicare outlays jumped 8.3% y/y, following last year's negligible increase. Growth in income security payments rose 1.9% y/y after a 2.1% decline last year. Social Security payments rose an accelerated 7.4% y/y. Interest payments have increased 21.0% y/y so far in FY'18 after increasing 9.2% last fiscal year. Showing moderation was spending on health programs which rose 3.6% so far this year following a 4.1% gain in 2017.

Net revenues have risen 0.6% y/y so far in FY'18 after a 1.5% increase during all of last fiscal year. Corporate income tax receipts declined by nearly one-third y/y due to newly enacted tax cuts. That followed last fiscal year's 0.8% decline. Individual income taxes increased 7.0% y/y as employment continued to improve. That compared to a 2.7% rise during all of last fiscal year. Social insurance receipts were fairly flat y/y following last year's 4.2% rise, and excise taxes improved 8.7% y/y after last year's 11.8% decline.

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 Aug 2018 FY'17 FY'16 FY'15 FY'14 FY'13
Budget Balance (Billions) -- $-214.1 $-665.7 $-585.6 $-439.1 $-483.4 $-680.2
  As a percent of GDP -- -- 3.5% 3.2% 2.5% 2.8% 4.1%
% of Total
Net Revenues (Fiscal Year YTD 2018, Y/Y % Change) 100 0.6% 1.5% 0.6% 7.6% 8.9% 13.3%
  Individual Income Taxes 47 7.0 2.7 0.3 10.5 5.9 16.3
  Corporate Income Taxes 9 -30.4 -0.8 -12.9 7.2 17.3 12.9
  Social Insurance Taxes 34 0.5 4.2 4.7 4.1 8.0 12.1
  Excise Taxes 3 8.7 -11.8 -3.3 5.3 11.1 6.3
Net Outlays  (Fiscal Year 2017 YTD, Y/Y % Change) 100 6.7 3.3 4.5 5.3 1.4 -2.4
  National Defense 16 6.8 0.8 0.7 -2.3 -4.7 -6.3
  Health 12 3.6 4.1 6.2 17.8 14.3 3.3
  Medicare 14 8.3 0.6 8.7 6.7 2.8 5.5
  Income Security 12 1.9 -2.1 1.0 -0.9 -4.3 -1.1
  Social Security 24 7.4 3.1 3.2 4.4 4.5 5.2
  Veterans Benefits & Services 4 10.8 1.2 9.3 6.8 7.7 11.5
  Education, Training, Employment & Social Services 2 -33.5 31.6 -10.2 34.7 25.9 -21.9
  Interest 9 21.0 9.2 7.8 -1.8 2.8 0.4
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