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06/20/2014

A Look at the Budget Deficit

The other day the Treasury Department announced the budget deficit in May was $130 billion, $9 billion less than the $139 billion shortfall in May 2013, and with four months left in the fiscal year, it appears the deficit for Fiscal 2014 will be in line with an April Congressional Budget Office projection, $492 billion, the smallest in six years as you can see from the figures below. Next year the figure could fall further to $469 billion, but then entitlements take over in force and the figure heads back up.

However, turmoil in the Middle East, for one, could preclude future cuts in defense spending (or cuts in the rate of growth), while sluggish economic growth would impact revenues. 

And these are but projections. For example, while the CBO says it has a handle on ObamaCare and its future costs, this really can’t be known with any certainty as yet. It could be better...or it could be worse. Interest rates are another critical item. Will they normalize, or, as PIMCO projects, will a “new neutral” mean rates well below the historic norm for years to come, which would be a positive in terms of lower interest expense on the federal debt?

U.S. Budget Deficit (billions; fiscal year ends 9/30) / Revenues-Outlays

F 2007... $160...$2568 / $2728
F 2008... $458...$2524 / $2982
F 2009...$1412...$2105 / $3517
F 2010...$1294...$2162 / $3456
F 2011...$1296...$2302 / $3598
F 2012...$1087...$2450 / $3537
F 2013... $680...$2775 / $3455

Updated Projections (Congressional Budget Office, April 2014)

F 2014... $492...$3032 / $3523
F 2015... $469...$3305 / $3774
F 2016... $536...$3475 / $4011
F 2017... $576...$3621 / $4197
F 2018... $627...$3764 / $4391
F 2019... $722...$3927 / $4649
F 2020... $804...$4099 / $4903
F 2021... $878...$4284 / $5162
F 2022... $998...$4486 / $5484

Sources: Congressional Budget Office / Treasury Department

Wall Street History will return in two weeks.

Brian Trumbore



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Wall Street History

06/20/2014

A Look at the Budget Deficit

The other day the Treasury Department announced the budget deficit in May was $130 billion, $9 billion less than the $139 billion shortfall in May 2013, and with four months left in the fiscal year, it appears the deficit for Fiscal 2014 will be in line with an April Congressional Budget Office projection, $492 billion, the smallest in six years as you can see from the figures below. Next year the figure could fall further to $469 billion, but then entitlements take over in force and the figure heads back up.

However, turmoil in the Middle East, for one, could preclude future cuts in defense spending (or cuts in the rate of growth), while sluggish economic growth would impact revenues. 

And these are but projections. For example, while the CBO says it has a handle on ObamaCare and its future costs, this really can’t be known with any certainty as yet. It could be better...or it could be worse. Interest rates are another critical item. Will they normalize, or, as PIMCO projects, will a “new neutral” mean rates well below the historic norm for years to come, which would be a positive in terms of lower interest expense on the federal debt?

U.S. Budget Deficit (billions; fiscal year ends 9/30) / Revenues-Outlays

F 2007... $160...$2568 / $2728
F 2008... $458...$2524 / $2982
F 2009...$1412...$2105 / $3517
F 2010...$1294...$2162 / $3456
F 2011...$1296...$2302 / $3598
F 2012...$1087...$2450 / $3537
F 2013... $680...$2775 / $3455

Updated Projections (Congressional Budget Office, April 2014)

F 2014... $492...$3032 / $3523
F 2015... $469...$3305 / $3774
F 2016... $536...$3475 / $4011
F 2017... $576...$3621 / $4197
F 2018... $627...$3764 / $4391
F 2019... $722...$3927 / $4649
F 2020... $804...$4099 / $4903
F 2021... $878...$4284 / $5162
F 2022... $998...$4486 / $5484

Sources: Congressional Budget Office / Treasury Department

Wall Street History will return in two weeks.

Brian Trumbore