by Bill McBride on 10/12/2015 04:33:00 PM
Monday, October 12, 2015
Note: Fiscal 2015 ended on September 30, 2015.
From CBO: Monthly Budget Review for September 2015
The federal government ran a budget deficit of $435 billion fiscal year 2015, the Congressional Budget Office estimates—$48 billion less than the shortfall recorded in fiscal year 2014, and the smallest deficit recorded since 2007. Relative to the size of the economy, that deficit—at an estimated 2.4 percent of gross domestic product (GDP)—was slightly below the average experienced over the past 50 years, and 2015 was the sixth consecutive year in which the deficit declined as a percentage of GDP since peaking at 9.8 percent in 2009. By CBO’s estimate, revenues were about 8 percent higher and outlays were about 5 percent higher in 2015 than they were in the previous fiscal year.And on September:
The federal government realized a surplus of $95 billion in September 2015, CBO estimates—$11 billion smaller than the surplus in September 2014. Because September 1, 2014, was the Labor Day holiday, certain payments that ordinarily would have been made in September were instead made in August. Without those shifts in the timing of payments, the surplus for September 2015 would have been $8 billion larger than last September’s.As former Fed Chairman Ben Bernanke noted in February 2013, the deficit as a percent of GDP would actually be smaller now without the "sequester":
The CBO estimates that deficit-reduction policies in current law will slow the pace of real GDP growth by about 1-1/2 percentage points this year, relative to what it would have been otherwise.The "know-nothings" in Congress didn't listen then, and they are not listening now.
A significant portion of this effect is related to the automatic spending sequestration that is scheduled to begin on March 1, which, according to the CBO's estimates, will contribute about 0.6 percentage point to the fiscal drag on economic growth this year. Given the still-moderate underlying pace of economic growth, this additional near-term burden on the recovery is significant.
Moreover, besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run for any given set of fiscal actions.
The Treasury will report the actual figures tomorrow.
Posted by Bill McBride on 10/12/2015 04:33:00 PM