US Government Revenues Suffer Biggest Drop Since The Financial Crisis

Tyler Durden's picture

On the surface, today's monthly budget statement was disappointing: in February the US Treasury brought in total receipts of $172 billion, versus outlays of $364 billion, resulting in a decicit of $192 billion, more than tha $190 billion expected (if in line with last year's $192.6 billion deficit). For the fiscal year through Feb. 28, the total US budget deficit was $349 billion, virtually identical to the $351 billion deficit over the same period in 2016 and set to keep rising this year and for the foreseeable future.

On a 12 month run-rate, the US deficit stood at 3.1% of GDP. A year earlier, that figure was a third less, or 2.2%.

However, something more concerning emerges when looking at the annual change in the rolling 12 month total. It is here that we find that, like last month, in the LTM period ended Feb 28, total federal revenues, tracked as government receipts on the Treasury's statement, were $3.275 trillion. This amount was 1.1% lower than the $3.31 trillion reported one year ago, and is the third consecutive month of annual receipt declines. This was the biggest drop since the summer of 2008. At the same time, government spending rose 3.8%.

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 double digit % plunge in corporate income tax, which begs the question what are real corporate earnings? While we hear that EPS are rising, at least 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 February, the YTD number was $611bn fractionally higher than the same period 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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Mr.Sono's picture

Bring it on bitchezzzzz. Let's see how it will all play out? I hope Trump will blame the Fed for it and then to prove his point, he will  do audit.

DownWithYogaPants's picture

Mr Trump:  Bill Still for Secretary of the Treasury.  United States notes to replace Federal Reserve notes.  Federal Reserve to the dustbin and fractional reserve lending too.

junction's picture

Obama left Trump with a "balloon mortgage".  For all the happy talk, Trump's best option is to kick the can repeatedly down the road.  Drive down a major highway like the New Jersey Turnpike and look for brick shell buildings that once housed factories.  Those buildings have been empty for decades, since Bush 39 started massively offshoring American jobs to China and other points east. What new jobs do you see now from technology companies: Twitter can't turn a profit, Uber is burning through billions as it drives down the price of taxi medallions and do you use snapchat?

In the news was a story on corporate taxes that says that facebook has saved $5.8 billion in corporate taxes by writing off the difference between the cheap price of executive stock options and actual redemption value when the option was exercised.  $5.8 billion into the pockets of already rich Facebook executives.  Meanwhile, under FATCA, Treasury is seizing undeclared overseas bank accounts of more than $10,000 from American citizens, calling it money laundering.  Trump is doing nothing about that, just like he is pretty much doing nothing about anything else except getting behind the Republican plan to triple or quadruple the fine for any middle class person who does not take out the new health insurance plan Ryan is sponsoring.  

hardmedicine's picture

and where is my TAX CUT???

That should have been first.  WE are drowning out here in the land of deplorables.  I need some money so I can go and keep that target store from having to close down........ really I need it to put in gold and silver for my retirement but they don't need to know that.

flicker life's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... http://bit.ly/2jdTzrM

Conax's picture

$35 billion? No problem, have it for you in the morning.

Let's go, Elwood.

jamesmmu's picture

Caused by deregulation?

max2205's picture

Forgive student loans....no recession. ....fixed it.   Oh and Print!

Dragon HAwk's picture

If we default on the Fed who looses Money, they are a private bank right, they can take the loss and move on.

Chipped ham's picture

No matter how you slice it, it comes up peanuts.

boattrash's picture

Yet somehow, the news doesn't make my ass feel any less sore.

peippe's picture

Why?

Why did you create me only to tax me?

Why?

(Spoken in robot voice, of course)

Consuelo's picture

 

 

FANG pink slips en-masse, or it ain't real...

silverer's picture

But, but... Obama's steady eight year recovery?!???

Smedley's picture

WHAT???.....and we haven't even reached the NEXT crises!!

hotrod's picture

If February contributed 192 billion to this years fiscal deficit currently through February of 349 billion then does that mean Oct, Nov, Dec. January only contributed 167 billion or roughly 41 billion a month.  Why is February so HIGH?

espirit's picture

The honest people paid their income taxes in February.

(I couldn't write that with a straight face, and shit my pants)

be right back...

peippe's picture

I don't even got no checkbook, 

so this is gonna take some time. 

Actually, never, no check in the mail. 

Not wasting a 'forever' stamp on these douches.

Good day to you sirs. I said good day!

ajkreider's picture

This is the result of using daily vs. monthly statements.  I bet a million bucks March is higher.  Why, because last year was a leap year, and the 29th of February was a Monday, which is the biggest reporting day of the week. So February was higher last year over this.

Who's taking bets?

Prisoners_dilemna's picture

If slowing down government spending causes a recession then I say, bring it on!

Muppet's picture

One word to explain revenue drop...

 

OBAMACARE

 

 

 

orangegeek's picture

Here comes austerity.

scoutshonor's picture

The government has revenues like the mafia guy collecting protection money for the mob has revenues--call it what it really is, extortion

blahzay's picture

Scouts, please keep in mind SOMEONE has to pay for the lifelong welfare benefits to anchor babies and the illegal aliens the lefties love so much.

roadhazard's picture

It's Ok, Trump will just give a $650 Billion dollar tax cut to the rich and everything will be fine.

Kprime's picture

plus he will increase the military budget by 54 billion and that will smooth things out

Dig Deeper1's picture

Rookie mistake here.  After correcting for the fact that last year was a leap year the $351B defecit should be closer to $345B making our $349B defecit for 2017 worse.  Of course the deadline for filing taxes has been extended to April 18th so we should see some upside from that.  Need any more help?  Lies, damn lies and statistics.  

NostraThomas's picture

Curious, the Treasury's Debt To The Penny website says February's deficit was $22,332,290,338.29. And according to the Daily Treasury Statement for February it was $22,332,000,000...

https://www.treasurydirect.gov/NP/debt/search?startMonth=01&startDay=31&...

https://www.fms.treas.gov/fmsweb/viewDTSFiles?dir=w&fname=17013100.txt

https://www.fms.treas.gov/fmsweb/viewDTSFiles?dir=w&fname=17022800.txt

 

Herdee's picture

Remember the slogan, deficits don't matter. They don't matter until the invisible confidence barrier is lost and then nobody believes in you. Especially when you have structural problems in your society. The trouble is that the world now understands that America is essentially running a ponzi scheme of debt and hoping that the rest of the world keeps financing their war machine. If you disagree, you get bombed.

https://dailyreckoning.com/stockman-debt-crisis-countdown-begins/

https://twitter.com/maxkeiser

Sledge-hammer's picture

I am all broken-up over the (((gov'ts))) revenue drop.