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On Thursday, November 14, 2012, the US Treasury Department reported that the U.S. Government had a budget deficit of $120 billion for the month of October. With total outlays of $304B, this means the government had to borrow 39 cents for every dollar it spent!

This shows the information graphically. (click to enlarge)

Year-over-year, receipts for the month of October grew by 13% but spending rose even faster at 16.4%!

Year

2012

2011

Change

Change

$B

$B

$B

%

October Receipts

184.316

163.072

21.244

13.0%

October Outlays

304.311

261.539

42.772

16.4%

October Surplus (Deficit)

-119.995

-98.466

-21.529

21.9%

Data from http://www.fms.treas.gov/mts/index.html

October 2012 was the start of fiscal 2013 so the fiscal year only has one month of data.

2013 Year-To-Date

$M

$B

Year-to-date Receipts

184,316

184.3

Year-to-date Outlays

304,311

304.3

Year-to-date Surplus (Deficit)

(119,995)

(120.0)

Deficit as percent of Outlays

39.4%

All this borrowing by the government is supported by the Federal Reserve (Fed) holding interest rates extraordinary low. Add in the Fed's programs of quantitative easing to buy US debt and expand the Fed's balance sheet gave the Fed its intended effect of "reflating the economy" by pushing asset prices higher. Oddly, the exchange traded fund for Gold (NYSEARCA:GLD) is essentially flat over the past year while stocks in the S&P500, counting dividends reinvested with this chart of SPY, are up over 13.5%.

(click to enlarge)

(click to enlarge)

(SPY is the exchange traded fund for the S&P500)

Despite the recent sell-off in SPY, my decision to hold SPY over gold has been a good one this past year.

Disclosure: I am long SPY and own the traditional index fund versions of VTI and VOO bought long ago in various taxable and tax deferred accounts.

Notes

  1. SPY is the exchange traded fund for the S&P 500 Index.
  2. VTI is Vanguard's "Total Stock Market" exchange traded fund.
  3. VOO is Vanguard's new exchange traded fund that tracks the S&P 500 Index. It is a lower cost alternative to SPY. I own and write about SPY, as I have many years of data for it, but VOO could do slightly better than SPY over time because it has a lower expense ratio.
Source: U.S. Borrowed 39¢ Of Every Dollar Spent In October 2012