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Treasury Budget:  Tweet-worthy Headline, But All Just Calendar Shifts

May 10, 2017
Bottom Line: While the headline surplus for April may prove tweet-worthy, the surplus was almost entirely due to a shift in payments for military personnel, supplemental social security and medicare and prescription drugs from April to March since April 1 fell on a weekend. Additionally, there was a large shift in corporate income tax receipts from March to April. Overall the trend remains that growth in tax receipts is nearly flat while outlays are growing steadily. Year-to-date the deficit is very close to where it was last year. While there is still the potential for fiscal policy changes that impact this fiscal year, that is looking less likely with only four and a half months left in the fiscal year -- the OMB estimates that FY17 will see a deficit of nearly 600B, more than FY16's deficit of 587B. The data so far suggests FY17 should be very close to the OMB estimate.

The Treasury Budget SURPLUS totaled $182.4 billion in April, better than the consensus estimate of a surplus of $179.0 billion. This compared with a surplus in April 2016 of $106.5 billion. For the first 7 months of the fiscal year, the deficit has totaled $342.8 billion, a decline of $11.8 billion from the first 7 months of the last fiscal year.

Receipts ROSE by 3.9% from its year ago level, primarily because of increase in corporate and individual income tax receipts. On a 12-month average basis, receipts are now increasing only slightly, after steadily rising since January 2010.

Outlays FELL by 17.7% from its year ago level, partly because of the shift in the timing of certain payments. On a 12-month average basis, the trend in federal outlays is now turning modestly higher. After several years of declining unemployment benefit and military outlays, upticks in health and medicare are turning the trend.