On the revenue side…a nice surprise…+$22B good for an 8% improvement. Some of that looks like the extra business day and a pretty big increase in Excise taxes (Any chance the newtariffs are ending up in this bucket??)….regardless…this is a solid beat and the first in a while, so we’ll take it!!
Outlays were up big on timing, so best to look at the YTD…where we are looking at +6% YOY, which may not sound too scary, but it’s big….especially with flat revenues and a good chance next year hits the ground running at just a little less given a 3% COLA that is about to be pushed out along with increasing boomer retirements and soaring interest expenses…..plus who knows what kind of new spending Trump and the Democrats will come up with next year.
Put it all together, and aside from a nice revenue boost, no real surprises here….it’s still just a slow moving train wreck. Revenues are flat YOY and will likely see YOY declines through April 2019 driven by tax cuts. Outlays are growing at around 6%….which feels too hot to sustain…but 4-5% looks possible. 2017 ended with a 700B cash deficit…2018 is honing in on about $900B-$950B….and while speculative, 2019 at $1.1T seems like a reasonable guess with a lot of unknowns.
Looking forward…November is going to be a doozy…with low revenues and outlays up big on timing as payments due 12/1 will be pulled forward and paid out 11/30…look for a $200-$250B deficit. December however, should manage to swing a surplus since it will be light on outlays…maybe $50B or so in the black depending on how revenue strangth/weakness.
Stay tuned folks…we are on schedule to zip past $1T again by this April…possibly a bit sooner…..just in time for another debt limit fight. Popcorn??