The U.S. Treasury releases a monthly account of the surplus or deficit of the federal government. Changes in the budget balance of the annual fiscal year (which begins in October) are followed as an indicator of budgetary trends and the thrust of fiscal policy. Why Investors Care
| Released on 6/11/08 For May 2008 | ||||||||||||
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Highlights
Tax stimulus checks added $48 billion to May's $165.9 billion Treasury deficit, an unwanted record and dwarfing last May's $67.7 billion deficit. Adding another $20 billion to the deficit is a calendar quirk tied to June 1 falling on a weekend. Government receipts are light in May but not outlays which, led by defense, jumped nearly 20 percent in the month for a year-on-year rate of 9.7 percent that compares with a paltry 0.3 percent rise for receipts. On a fiscal year-to-date basis, the deficit is up 115 percent.
Today's data are a negative for dollar assets and a reminder that stimulus effects in the months ahead will add further pressure as may softer individual tax receipts in line with contraction in the labor force. Yesterday's trade deficit showed a steep oil-based widening, another negative for dollar assets. Data on foreign demand for U.S. securities will be posted Monday in the Treasury International Capital report which has in past months shown firm and consistent strength despite the shrinking dollar, widening fiscal gap, and slowing economy.
The U.S. Treasury monthly budget report for April showed a surplus of $159.3 billion but was well below the April 2007 surplus of $177.7 billion. The fiscal year-to-date deficit for 2008 remains quite large compared to that for last year, a $152.2 billion deficit versus $80.8 billion. Fiscal year-to-date receipts have slowed to a 3.0 percent gain while outlays were up 7.4 percent. Individual income tax receipts are up 6.0 percent while corporate income taxes are down 14.7 percent. Looking ahead, the month of May typically shows a moderate deficit for the month. Over the past 10 years, the average deficit for May has been $47.4 billion. But we are likely to see a surge in the deficit due to the mailing of income tax rebate checks in May.
Treasury Statement Consensus Forecast for May 08: -$155.0 billion
Range: -$165.0 billion to -$96.0 billion.
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The federal budget balance is not seasonally adjusted. Consequently, it is useful to compare the current month's budget deficit or surplus to the same month for a couple of years. Some months are known to have large surpluses because quarterly estimated tax payments are received by the government. |
| 2008 Release Schedule | ||||||||||||||||||||||||||
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