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Treasury Budget:  FY18 Starts with Larger Than Expected Deficit

November 14, 2017
Bottom Line: Despite the fact that October 1st fell on a Sunday this year, causing many outlays to get pushed into September, the deficit for October, the first month of the 2018 Fiscal Year, was still larger than expected. On a trend basis tax receipts are only growing very modestly, while outlays continue to grow steadily. For now the OMB's estimate for 2018's deficit stands at $590B, smaller than 2017's deficit of $666B. Of course, forecasts could change materially if any new tax legislation gets passed.

The Treasury Budget DEFICIT totaled $63.2 billion in October, lower than the consensus estimate of a deficit of $59.0 billion. This compared with a deficit in October 2016 of $45.8 billion.

For the first month of the fiscal year, the deficit has totaled $63.2 billion, an increase of $17.4 billion from the first 11 months of the last fiscal year.

Receipts ROSE by 6.2% 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 ROSE by 11.6% 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.