Recession Alert: Treasury Receipts Turn Negative For The First Time Since The Financial Crisis

Tyler Durden's picture

On the surface, today's monthly budget statement showed good news: in January the US Treasury brought in total receipts of $344 billion, versus outlays of only $293 billion, resulting in a surplus of $51 billion, substantially greater than the $40 billion expected (and well above last year's $28 billion deficit), a surplus which however was largely due to a law requiring the IRS to delay sending out tax refund checks to household claiming certain tax credits. For the fiscal year through Jan.31, the total US budget deficit was $157 billion, and set to keep rising this year and for the foreseeable future.

However, a more concerning datapoint emerges when looking at the annual change in the rolling 12 month total. It is here that we find that for the LTM period ended Jan 31, total government receipts were $3.27 trillion. This number was 0.3% lower than the $3.28 trillion reported one year ago.

Why is this important? Because as the chart below shows, every time since at least 1970 when government receipts have turned negative on an annual basis, the US was on the cusp of, or already in, a recession. Indicatively, the last time government receipts turned negative was in July of 2008.

One potential mitigating factor this time is that much of the collapse in receipts is due to a 12% plunge in corporate income tax, which begs the question what are real corporate earnings? While we hear that EPS are rising, it is clear that for IRS purposes, corporate America is in a recession.

How about that far more important indicator of overall US economic health, and biggest contributor to government revenue, individual income taxes? As of January, the number was $1.56 trillion, fractionally, or 0.3% higher than a year ago, and declining.

Finally should Trump proceed to cut tax rates without offsetting sources of government revenue, a recession - at least based on this indicator - is assured.

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evoila's picture

this is the greatest shorting opportunity in a decade. 

Rainman's picture

don't ... you'll be tweeted into insolvency.

scraping_by's picture

Nothing's under the radar anymore.

froze25's picture

The market can stay irrational longer than you can stay solvent.

strangeglove's picture

Check SHLD if you are still in doubt

JRobby's picture

Pushed the EIC returns efile to Feb 15. So the sound of 20 million crack pipes lighting up is pushed out to Feb 28.

Raffie's picture

I will try to look shocked but no promises.

*GASP!* an gasp I should..

Burnbright's picture

Im not a trader but having watched what is going on for 8+ years every day I'd say the only way you can really short this market without exposing yourself to risk is to buy physical gold.

If it were a free market I would agree with you and put my money on that trade too. What little I do have.

GUS100CORRINA's picture

While on the surface, it appears to be a fantastic opportunity to short this MESS. Oh excuse me, I meant to say MARKET.

This market is NOW IRRATIONAL and can melt up forever as long as there are insane people at the helm.

I have concluded ... the leaders (FED, Banks, Govt., etc) are insane and I believe GOD has made them this way on purpose.

[2Th 2:11 NKJV] 11 And for this reason God will send them strong delusion, that they should believe the lie,

If this is  the Jewish year of Jubilee, then Jun'17 is the first time that any fireworks will appear. (I believe based on Biblical Evidence that 2016-17 is the Jewish Year of Jubilee)

Stay tuned and keep your eyes on the Holyland because things are about to heat up in a big way.


frank further's picture

not insane, just puffed up and self important

Chipped ham's picture

Somene said that "they" can keep the market irrational longer than you can remain solvent.  Or something like that.

trouba z ceska's picture

"greatest shorting opportunity"? Why? Because it's irrational and overbought? It's been so since November and nothing has changed. Even Tyler is still the same kind of moron

PlayMoney's picture

You can't go off of actual data, earnings, anything like that as they don't matter. We have been in a "shorting" environment for a couple of years, on paper. Earnings peaked Sep 2014 at $106. As of Dec 2016 they are down 16% at $89. In todays "market" a 16% drop in earnings gives you a moonshot straight up in stocks.

lolmao500's picture

Less government $$$ is not a recession, it's a WIN

gatorengineer's picture

What percentage of the ECON omy do you think the giverment is and the already existing wealth redistribution system?  My guess is 60%....  So if you cut that 10 percent that is a fucking huge whole.  I am not saying dont do it, but in the short run, it may be ugly for main street. Not wall street main street.

floomby's picture

Entitlements actually are at is about a fifth. Compared to military which is just a couple percent. That us why I cringe when I here things like "if you really want to cut spending you start with the military". Military spending has been falling, entitlements rising. If the current rate of growth is about 9% relative to GDP. Which makes it more like 11-12%. It is totally insane, and considering Trump doesn't want to do entitlement reform we have a serious problem.

AGuy's picture

"Entitlements actually are at is about a fifth"

for 2014, The sum of SS, Medicare,Health,Vet Services & Interest (Debt) the total outlay is 2.02 Trillion. In 2014 Income tax & Fica was 2.7 Trillion. Which means about 74% of the revenue is required just to pay off just entitlements and Interest.

"onsidering Trump doesn't want to do entitlement reform we have a serious problem."

No way they will ever cut entitlments. but this is what I think is going to happen:

1. Raise the retirement age for younger workers (those born after 1959). They will perodically increase the retirement age (ie carrot on a stick) so that younger workers never can retire. Many moons ago, a worker at the Social Sercurity Admin told me that 1960 was the cut off year for future retirees.

2. They will print money continue to pay retirees. Old people vote and vote often. A ten Million Boomer March in DC would quickly reverse any attempt to reign in entitlements for the boomers.

But there is another snag: State and local gov't workers likely didn't pay into SS, because state/local gov't had thier own pensions. Now all these Pensions plans are going bust. I don't see them fixing it.

corporatewhore's picture

LOL.  We're in a depression and have been.  All the QE in the world can't stop the incoming tsunami--wave II

scraping_by's picture

The real economy's in a depression, the financial economy's having history-making success. Since lower taxes are advertised to make out on the trickle down, no surprise tax revenue's going the opposite direction as the GDP number.

BandGap's picture

Time for the dash for free cash!

PreciousMetals's picture

WHAT DO WE SHORT THOUGH. Is it the dollar? stock? and then BUY GOLD AND SILVER? hmmm... decisions....

stant's picture

Biz fell outa bed starting first of Dec, talked to my supply house guys last two months for them is the worst since he's been there. Feb is looking even worse. FYI from the trenches


corporatewhore's picture

agreed.  and in both jobs i work full time and it's awful in each.  worst in seven years.  demand fallen off a cliff.  pricing pressure.  people broke.

scraping_by's picture

The race to the bottom for labor is now pulling business down with it. I imagine the people in the financial industry are hiring acting coaches to perform a convincing shocked face.

corporatewhore's picture

thirty years in that industry and that's all it ever was.  great acting.  bullshit ability.

vq1's picture

Is only recently that I realized that we are not near bottom yet. And how many concessions have I already made? 


My retirement is trapped in a 401k

I work far more than 40 hrs (required)

On call 24/7 (minus sleep)

My pay seems good, until i use an online inflation calculator to find my purchasing power....

markitect's picture

Same story here but we noticed it end of 2015.  There was marginal activity first half of 2016 but took a shit since last summer with no end in sight.  Im in Illinois so we may have been early to the current recession.  Hell we let people go last year if this keeps up we will have to close the doors.  A lot of long time associates of mine have closed doors the last couple of years and just "retired".  It feels like we've gone from stagnation to contraction again.

g'kar's picture

Impeccable timing

coast1's picture

Has anyone ever seen an old cartoon where one cartoon character, grabs another cartoon character, turns him upside down and shakes all the money out of his pockets?  reminds me of the stock market.  The banksters are going to get every dime they can before collapsing, so I see the market continue to go up....on the other side of things, silver hit 18 dollars today? 

 Cashless society,,,lol, nobody has cash anymore anyway.   I only use cash, but if I give a cashier or whatever, a one hundred dollar bill, they look at me like I am a drug dealer, thief, or counterfeiter.  wtf

Omega_Man's picture

the budget should equal the earnings.....

itstippy's picture

I gave you a +1, but actually the budget should be 10% less than revenues so we can pay down our horrendous debt.  If we tackle the debt in a serious manner starting today we can have it all paid off in just 16 generations.

corporatewhore's picture

Who was it that said "it takes eight generations to get the smell of new money out of someone?"

TurtleSoup's picture

16, eh ?.  I feel so much better !

In.Sip.ient's picture

Meanwhile the FED is demonstrating quite

nicely, that regardless of what the economy

does, you can dial in any number you like

on the DJIA... whether it looks loony or not!


Jason T's picture

Gasoline demand is down 6% y/o/y

... something ain't right.


my guess, the leftists are on strike.

wisehiney's picture

Did they blow their wad with the $1.4 trillion they blew over the past year trying to get hitlery elected?

Without ever increasing deficit spending there is no economy.

hotrod's picture

Dont understand the down vote.  Obama spent a boat load rigging the system for Hillary that is why we had the DEBT CEILING HOLIDAY and I would agree that economy needs a certain flow of printed money as it is not self sustaining by organic growth.

cashtoash's picture

I favor no tax-print only model for guvt., No taxes on anyone, the govt prints what it needs to spend, that way no IRS, no limit on what govt can spend. We will have dow 100k in no time

seewhogivesafuck's picture

I guess you guys already are with it.

nakki's picture

The world is way past the point of no "return" at this point. Looks like all those BLS numbers were are bullshit. Problem is:

Cutting government jobs equals millions out of work. Cut Medicare and medicaid means 100's of thousands out of work. Not saying this shouldn't happen, just saying. 

Robot McDonald's means no jobs and millions out of work. 

The idea that corporations will do anything but buybacks with any tax savings or repatriating dollars is ludicrous.

More wars more debt. Tax cuts less revenue. Less jobs less revenue. More debt is all the world has left, that and more Goldman Sachs.

Long gone are the days of $25 an hour manufacturing jobs.This isn't 1950 or 1980 people who compare Trump to Reagan are idiots. Different time different world (rates, China, debt etc...).

Just more of the same Centralized Confiscation and Consolidation through Counterfeiting

spiral galaxy's picture

Seriously! How many times has ZH published 'end of the financial world' story which turned out to be nothing?! Hello Dow 20,200!!! I've listen to this shit since S&P 666 2200. I'm waiting for ZH to announce 'all clear! Stocks up!!' As a clear single to short this piece of turd :-(

Dr. Richard Head's picture

The state of the economy and the stock market are no longer correlated.  Plan accordingly. 

BocceBaal's picture

ZH publishes contrarian opinions about the market. One of these days they will be right.

Jim in MN's picture

We need the thrills, man. 

corporatewhore's picture

Hopefully you visit here for balance to the sunshine, rainbows, lollipos and skittles manufactured by the parties that be.

It's good to absorb an alternative view.

Doom porn can be fun.

trouba z ceska's picture

The best you can do is to cancel you account here. It's a terrible site held by mentally ill person