The US Cash Deficit for October 2015 ended up at $119B on $236B of net cash revenues and $355B of cash outlays topping last October’s deficit by $9B.
Revenue:
Cash revenue was down $10B…the first YOY miss since January when early refunds drug down net receipts under the prior year. There are two primary factors here…first was last October Justice pulled in $9.3B of cash compared to $0.7B this October. The names elude me but I believe this was some big banking fines made their way into the federal coffers. She second factor was that there was one fewer business day vs October 2015, which all else equal would generally be a ~$10B reduction. Still…even with one fewer business day, general tax receipts manages to pull more or less even with last year, which is hopefully a good sign that November…which gets the benefit of an extra business day vs 2014, may be able to exceed our +5% target. Overall, while I hate to see a YOY miss, the fundamentals still point to a baseline of +5% revenue growth. While this is far less than we have seen over the past few years, it is more or less enough to stabilize the deficit between $400-500B and keep at bay the outlay growth of ~3%. For the Year through 10 months, 2015 revenue stands at +6.3%…losing a full % in the last month alone.
Outlays:
At first glance Outlays were flat, but once you add back in another business day and ~$6B of interest payments that slipped to November, we are a little bit above that 3% baseline discussed above. Medicare and Medicaid continue their march upward at +10%. SS is steady at +5%….it will be interesting to see what next year’s comps look like with no COLA increase this year. If nothing else it should give us a good idea what the underlying growth looks like, though I don’t expect too many seniors excited about the experiment. For the year, cash outlays are up right at +3%.
Deficit:
At $119B, the deficit increased $9B over last Octovers $110B deficit on flat outlays and lower revenue. For the year, the deficit sits at $422B, a $76B YOY improvement over 2014. I am expecting another moderate deficit in November, let’s just call it $75B, followed by a $50B surplus in December which would land the full year at just under $450B.
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