US Government Spending Surges 17% Pushing May Deficit 70% Higher; There Is Just One Problem

Tyler Durden's picture

When the Treasury reported its monthly receipts and outlays data for the month of May at 2pm today, it was more of the same: far more spending than receipts, resulting in a 68.4% surge in the US budget deficit compared to a year ago. Specifically, outlays of $329 billion soared 19% compared to a year ago, offset by a modest 7% increase in receipts, resulting in a $88.4 billion deficit in May, more than the $87 consensus estimate, and well above the $52.5 billion a year earlier. The reason: government spending in areas such as Medicaid and defense rose at a far faster pace than revenue.


Year-to-date, the US deficit was $433 billion for the first 8 months of the year compared to $405b last year, with year-to-date receipts rising 1.4%, or roughly 60% of the 2.3% increase in outlays.

There was one silver lining: after contracting for 4 consecutive months at the beginning of the year, 12-month cumulative government receipts managed to eek out two consecutive months of growth, and rose 0.4% in May.

There was a notable footnote: the Treasury received $8.4b from the Fed in May in deposits of earnings, and $56.5 billion year-to-date as the biggest Pyramid scheme of all time continued, with the Fed remitting billions to the Trasury, artificially boosting the government's "tax revenues."

And yet, despite the ongoing growth in the US budget deficit as tax receipts fail to keep up with government spending, a problem has emerged: as shown in the chart below, on an LTM basis, government outlays - the same outlays which soared during the financial crisis to pull the US out of the 2008/2009 hole - have been sliding, and after growing at a 5% annual pace three years ago, are almost back at the flatline as the government, believe it or not, is not spending nearly enough to keep the economy growing.

At the current rate, government "stimulus" is poised to turn negative some time in the next few quarters, if not months, effectively resulting in a drag on the US economy, one which comes at the same time as private sector loan creation is also set to turn negative as we highlighted over the weekend.

In other words, with the US economy potentially on the verge of a recession, government spending is, surprisingly, not enough to keep the economy from contracting. And making matters worse, with Trump in charge, and a deeply polarized Congress, any possibility of a sharp spending boost if and when the needs arises, appears very much in question. In other words: keep a close eye on government outlays - as big as they are, they may not be big enough to keep the US from sliding into the next recession.

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BaBaBouy's picture

""Deficit 70% Higher""

Oh Don Worry, The Globalist CB's continue to buy more USD faits and short out their GOLD...

Hal n back's picture

the similar data for fye 9 30 16 shows a 587 billion deficit, vs the debt growth of 1.4 trillion.

consequently this data is inaccurate. even by govt standards


WTFUD's picture

Pick a card . . . show it to me . . . place it anywhere in the pack . . . 8 of diamonds.

Countrybunkererd's picture

Someone left the Joker in the deck and it shows up every time.

Deep In Vocal Euphoria's picture

bigger government less freedom....trumpers still think he's going to shrink it.......shakes head....


just sitting here watching as the population orbits into oblivion.....zombie nation

unplugged's picture

why would you think trump (or any one person) has any control over it ?

froze25's picture

Congress does, they control the purse and their donors control them.

WTFUD's picture

You're Fired would be a show of intent, at least.

Déjà view's picture

DOJ BIG 2/3 rating agencies do a stellar job of maintaining highest credit ratings...
Imagine what would happen to Mr.Market/CONgress if...

I am Jobe's picture

Most of them are too busy on their phones unable to think. Even if oyu put this on FuckBook they wil not bother. Too numb 

Cordeezy's picture

The government will print the money we need, not to worry the system will continue as normal.  Our grandkids will curse us however.



I am Jobe's picture

Grandkids what, they will enjoy austerity like Greece. 

cheech_wizard's picture

But at least the hookers will be cheap.


sonya55's picture

And with My last oz. of Silver I will rent a Hooker, take My last Viagra, OD on Meth and leave this cruel world.

silverer's picture

Just print your own. Has the same value. The value is zero. What's wrong is everyone is accepting counterfeit money. The Fed prints it. It's missing $0.92 out of every dollar. People take it thinking it's worth something, and it's just a major misrepresentation. Fraud is what it is.

rejected's picture

Just at UPS today to pick up a package. They no longer accept legal tender cash.

Printing won't work there.

I am Jobe's picture

Dammit , Netflix Show is still on all that matters- Signed Inbred Americans. 

Ben A Drill's picture

Even the best company to work for are screwing employees that file a workman compensation claim.

Endgame Napoleon's picture

Oh please, I have never filed anything any place where I worked, not even for Unemployment Compensation. I came to work every day, stayed all day and met their d****d quotas, often ending up as one of the employees generating and retaining the most sales, both from the standpoint of number and profit margin. It did me no good whatsoever except in a couple of cases where the manager was not a family-friendly babyvavationer, indulging the absentee-momma clique. There were a couple of other types of crony cliques, too. It is not always the mommas. And no, I did not complain about these absenteeism cliques, which was probably a mistake. They are low-energy barracudas. The truth is that one person's sales means nothing to them in the Automation Age unless you are a manager, providing some other things.

Herdee's picture

Government will bankrupt America.

.300WinMag's picture

That's been the plan since 1913. 


As they say in Goodfella's - and then when you can't barrow another buck, you bust the joint out...


Mod 2.0 will utilize Carbon Credits / pre cursor world governence to monitor / stronger world banking / multi region or world currency

Dead Indiana Sky's picture

Pills and missiles, the final 2 arrows in the quiver.

grasha87's picture

Jim Rickards has blamed free trade and comparative advantage for our economic problems, but here is why he is wrong:

Endgame Napoleon's picture

Free trade is not really free, nor is comparative advantage comparative. It is like comparing apples and oranges to juxtapose the expenses of a factory paying people $17/hr with a factory paying people $1/hr. As a Main Street shop owner, I did not have the "freedom" to buy the "comparatively" slave-made goods from offshored factories in bulk quantities at the same discount rates paid by the big-box retailers.

WinstonSmith1984's picture

Donnie is going to have a tough time eliminating the national debt in next 7 1/2 years like he promised.

Endgame Napoleon's picture

People will be madder if high-quality jobs are not created in this country: USA. And that will help lower the budget deficit via the taxes collected. It will also help lower the trade deficit that you guys never talk about. Trump can brag about the trade deficit decrease, pointing out how the MSM ignores it.

Vilfredo Pareto's picture

Meh.  Deficits don't matter.  That's what they tell us right?


Party on.