Submitted by Atlas Indicators Investment Advisors on February 14th, 2018
America’s budget ran a surplus in January 2018 according to the Treasury Department. Partially boosted by calendar influenced special factors, the nation took in $49.2 billion more than it spent to start the year. Since the first day of the year is a holiday, outlays for military active duty and retirement, Veteran’s benefits, and Supplemental Security Income were paid in December. Without these special factors, the surplus was $20 billion and not quite as good as a year earlier when it totaled $33 billion.
January was the first period under the new, lower tax regime, but revenues improved nonetheless. Compared to a month earlier, individual taxes rose over $47 billion to $211.9 billion. For perhaps a more fair comparison, this source of receipts was up over $14 billion from a year earlier. Additionally, taxes paid by corporations increased by over $4 billion versus the start of 2017. These growing revenues are symptomatic of the economy’s growth in the past 12 months.
Outlays are growing as well. America spent 6.5 percent more in January 2018 than a year earlier. Spending totaled $311.8 billion to start the year. Because of the special factors created by the calendar, spending growth was subdued versus December. However, America runs on a fiscal calendar, so it is constructive to see how the relationship between revenue and outlays look on a year-to-date basis. Spoiler alert: it deteriorated.
Versus this time last year, the deficit has worsened. Even in a growing economy, the shortfall has increased to $175.7 billion, up 10.8 percent. While it is relatively early in the fiscal year, it appears our nation’s deficit will increase in 2018. Including this indicator and our nation’s trading shortfall, it seems America’s twin deficits are not going away anytime soon.
