January 2019 Federal Budget
Submitted by Atlas Indicators Investment Advisors on March 11th, 2019
America’s budget deficit improved to start 2019. According to the Treasury Department, our nation’s budget ran a slight surplus in the period. While it’s always great to see black ink when describing the difference between income and receipts for the federal government, there wasn’t that much black ink. January tends to be a period of budget surplus for America, but the surplus diminished quite a bit from a year ago: $8.683 billion versus $49.237 billion to start last year.
America’s year-to-date comparison deteriorated, bigly. Let’s start with the 2017-2018 fiscal year-to-date shortfall from December 2017; it reached $224.953 billion. America’s December 2018 tally for fiscal year 2018-2019 reached $318.933 billion, an uptick of 42 percent! January’s comparison shows a 77 percent climb!!
The math is simple. Our outlays have grown on a year-to-date basis while revenues have fallen. The toughest part of this is knowing whether the levels of debt are impacting America’s ability to grow or not. While we don’t really know the answer, there are some smart people on both sides of the argument with compelling reasons. Some point to America’s relatively slow growth rate since the end of the Great Recession compared to earlier expansions as evidence of the headwind this debt level is creating. It feels more coincidental than causal to Atlas. However, that does not mean we believe debt levels have no restrictions, but there is another narrative that resonates with us.
Those who have been reading the Atlas notes long enough know we believe demographics drive a lot of the nation’s economic progress. America’s demographic situation is far from dire, but it isn’t close to optimal either. Our nation’s population (like most developed economies) is greying as birthrates slow. Additional people are a natural driver of economic output, but our replacement rate is well below prior periods, and we believe this is holding us back more than America’s debt level.