Another month, another $171 billion spent by the US government which it doesn't have.
At 2pm, the Treasury released its latest Monthly Treasury Statement which showed that in August - one month before the end of the fiscal year - the US budget deficit was a relatively tame, by recent standards, $170.6 billion, which was slightly better than the $173 billion consensus estimate, and a decline compared to the $200.1 billion a year ago.
The deficit was the result of a 3.7% increase in spending to $439 billion from $423.2 billion a year ago...
... offset by a 20.2% jump in receipts, which came in at $268.4 billion compared to just $223.2 billion a year ago (of this amount, the Treasury received $10.4 billion last month in deposits from the Fed). Despite the improvement in receipts, total spending was still more than 60% higher than revenues in the month of August, a trend which we don't see changing any time soon.
The continued spending spree was primarily due to continued welfare benefits, with Income Security amounting to $93 billion, second only to social security at $95BN, and followed by the usual suspects of Health ($71BN), National Defense ($52BN), Interest on the debt ($42 billion) and other spending far in the rearview mirror.
On a year to date basis, 11 months into the fiscal year, the US deficit rose to $2.711 trillion, a modest improvement to the $3 trillion deficit reported in the first 11 months of fiscal 2020 as YTD receipts are up 17.7% (from a much smaller base of course), compared to a 4% increase in outlays. Extending this to the start of the covid pandemic in March 2020, the US government deficit for the past 17 months is a stunning $5.1 trillion.
While debate rages over what the final number of the upcoming "epic" stimulus will be, we anticipate a number around $2.5 trillion, meaning that we are currently in the eye of the hurricane when it comes to spending and deficits, and in the next few months we will see another major surge in spending. But while there is still confusion as to the final shape of the upcoming "epic stimulus" which could be as large as 20% of US GDP...
... one thing is certain: the US will never again be able to fund itself using taxation alone, which now barely covers just 50% of the total US budget deficit.