February Budget Deficit Surges As Interest On US Debt Hits All Time High

February is traditionally not a good month for the US government income statement: that's when it usually runs a steep monthly deficit as tax returns drain the Treasury's coffers. However, this February was worse than usual, because as spending rose and tax receipts slumped, the US deficit jumped to $215 billion, the biggest February deficit since 2012.

According to the CBO, receipts declined by 9.4% from last year as tax refunds rose and the new withholding tables went into effect. On a rolling 12 month basis, government receipts rose only 2.1%, a clear slowdown after rising 3.1% in December after contracting as recently as March 2017. At this rate of decline, the US will post a decline in Federal Receipts by mid-2018.

Outlays meanwhile rose by 2% due to higher Social Security and Medicare benefits rose and additional funds were released for disaster relief.

Putting these two in context, in Fiscal 2000, Treasury receipts in the Oct-Feb period were $741.8 bn, nearly matching outlays of $741.6 bn. In Fiscal 2018 meanwhile, receipts in the Oct-Feb period are $1.286 tn while outlays are $1.677 tn. Receipts are growing an average 4% per year, while outlays are rising an average 7%.

Source: Reuters

Here is a snapshot of February and Fiscal YTD receipts and outlays.

But most troubling was the jump in interest on the public debt, which in the month of February jumped to $28.434 billion, up 10.6% from last February and the most for any February on record. In the first five months of this fiscal year, that interest is $203.234 bn, up 8.0% y/y and the most on record for any Oct-Feb period. The sharp increase comes as the US public debt rapidly approaches $21 trillion. And with the effective interest rate now rising with every passing month, it is virtually assured that this number will keep rising for the months ahead.

Source: Reuters

Comments

NoDebt Clueless Economist Mon, 03/12/2018 - 15:01 Permalink

Thank you, Dr. Krugman.  I was starting to think you only said that when there was a D in the White House.  Heh heh.

I would also like to remind all of you who bemoaned the lack of liquidity in the TSY market when QE3 was happening that all would be well.  The Government will always be more than happy to create more paper debt for all of you to trade.  And here we are.

- NoDebt, Clueless Economist

In reply to by Clueless Economist

Antifaschistische directaction Mon, 03/12/2018 - 17:32 Permalink

so let me see, this article is pointing out that 2015-2016 usa.gov's refi efforts into shorter term (i.e. cheaper) debt, is starting it's squeeze job.  NO SHIT!!   Hey, the party's only just begun.   

Let's see

4% of 25 trillion = 1 trillion (that's going to hurt)

Sure...it'll take a while for our average to revolve up to 4%.  Good thing we know where we'll cut 700 billion from the budget just to keep the interest from adding to the deficit.  oh wait.....

In reply to by directaction

JMT ThinkerNotEmoter Mon, 03/12/2018 - 17:09 Permalink

No, millenials have never had it this good. I mean, they have it way better even than those that same age had it in the late 1990s. 

 

The ones who are screwed are people over 40 years old (especially if you are male & white) .  There is extreme age discrimination in the workplace now--- especially in Finance, IT & Healthcare. 

It seems like everyone working is under the age of 35 from what I see in Boston & NYC

In reply to by ThinkerNotEmoter

ElTerco JMT Mon, 03/12/2018 - 18:11 Permalink

That's because Millennials Know Better (TM) than those old farts. They have a modern college education that is oh so much better than three or more decades of on-the-job real world experience. Having a firm grounding in reality is where most of those old farts have it wrong.

In reply to by JMT

TrustbutVerify Bill of Rights Mon, 03/12/2018 - 15:05 Permalink

Interesting thing about doomsayers predictions, so often when they are correct they are very correct.  They make their predictions on the numbers and how off they are relative to historical averages and norms. Reversion will happen sooner or later.  

The markets will catch up with the doomsayers predictions. 

You you laugh at the idea of $10,000 gold, I assume your market positions are "all in" with leverage.  

In reply to by Bill of Rights

Give Me Some Truth Bill of Rights Mon, 03/12/2018 - 15:18 Permalink

Re: Gold $10,000

What would be the "story" about the economy -and the dollar - if gold actually was trading at this level?

I think it would be a little different than the story we've been told for the last eight years.

... It was not $1800 gold that scared "them" in 2011, it was the possibility of $10,000 gold. This is still the scenario that terrifies them. Fortunately, they can prevent this from happening. And have.

In reply to by Bill of Rights

NoDebt Rainman Mon, 03/12/2018 - 15:11 Permalink

Thank you, Rainman.  I know there were a hardy few, but I got decidedly mixed reviews on that comment when I first put it up.

By the time the final proof of my observations is in, most of us won't care about it.  We'll be busy cannibalizing each other in the streets and eating bread made with sawdust.

 

 

In reply to by Rainman

invest3 Mon, 03/12/2018 - 15:03 Permalink

How much interest paid on public debt and debt owned by intergovernmental agencies like Social Security?  I estimate 2.5% on $21T works out to about $44B per month.  Am I missing something here?

Kaiser Sousa Mon, 03/12/2018 - 15:13 Permalink

"The historically high stock averages are another feature of make-believe America. The high price/earnings ratios do not reflect strong fundamentals, such as high rates of business investment, strong growth in real retail sales fueled by strong growth in consumer incomes. The Federal Reserve has used an increase in consumer debt to fill in for the missing growth in consumer income for so long that consumers have no more room to take on more debt. Without growth in wages and salaries or in consumer debt, consumer demand cannot drive the economy and business profits.

What explains the high stock prices? The answer is the trillions of dollars the Federal Reserve has created in order to stabilize the large “banks too big to fail” and bail out their extremely poor investment decisions. All of this liquidity found its way into the financial sector where it drove up the prices of stocks and bonds, enriching equity owners and denying retirees any interest income on their savings. The values of financial instruments are supported by money creation, not by underlying fundamentals. Yet, the stock averages are treated as proof of economic recovery and America’s first place in the world.

As I said, it is never-never-land in which we live."

https://www.paulcraigroberts.org/2018/03/08/make-believe-america/

wmbz Mon, 03/12/2018 - 15:14 Permalink

No one in the cesspool has lost any sleep over our nations debt. It's "free" money, just keep right on printing and borrowing.

Surely we can get to $30 trillion if we just try a little harder, and forget about the unfunded liabilities, who cares, can't pay for them anyway.

I Write Code Mon, 03/12/2018 - 15:56 Permalink

Print moar.

Moar print.

Rip At Mr No
Tarp I Mr No
Armor Pint
Mortar Pin
Ramp Intro
Tramp Iron
Tram Prion
Apron Trim
Patron Rim
Ran Import
Minor Tarp
Rapt Minor
Trap Minor
A Trim Porn
A Trip Norm
A Trip Morn
Pain Mr Ort
 

JibjeResearch Mon, 03/12/2018 - 16:18 Permalink

There is an informal agreement amount stocks fund families, bond fund families, and the middleman.  Bond families want 2.5% interest rate, stocks families do not want a crash, and the middleman keeps printing the USD.

Now, we are working on the month to month interest payment plan.

And yes, the no-asset people will feel the most pain, and deserving so for being incompetent.

Kokulakai Mon, 03/12/2018 - 16:27 Permalink

The piper approaches, I can hear his tune on the wind.

In short order the largest single budget item will be interest on the debt.

Forget the MIC; soon we won't be able to afford a standing army.

Let it Go Mon, 03/12/2018 - 19:09 Permalink

A rising deficit that has yet to yield dire consequences has given the American people a false sense of security. It is also clear that running up debt is far easier than paying it off. As things stand America continues to rack up a deficit each year of nearly $2,500 for every man woman and child in the country, such deficits were unheard of in the past unless it was during a major war.

The fact is with the artificially low-interest rates of today many people seem to have little desire to cut spending. We are literally gorging on debt, and most Americans seem to think that it is just fine and dandy to wildly run up debt as if there is no tomorrow. More on this topic, and some ugly numbers, in the article below.

 http://Is The Growing National Debt No Longer.A Major Issue? html