US 2018 Cash Deficit: $958B

2018 is now in the bank and it was pretty ugly no matter how you look at it… but first a quick look at December.

December 2018

We entered December with a $958B deficit and I expected a small surplus of about $20B as the timing issues from last month rolled off, helped by strong December revenues we normally see at the end of a quarter. But it wasn’t to be… despite dumping $45B of cost into November, December only managed underspend 2017 by $9B… good for an adjusted $36B increase in spending… about 10%. Revenues were down $4B…again, not a surprise given the tax cuts but still not the right direction. Put it all together and while it shows up as 0 on our chart… December posted a small $83M deficit… $0.1B for fans of rounding… leaving the 2018 cash deficit unchanged at $958B


Looking at the full year, revenues were essentially flat, up just $19B, or about 0.5%. That’s actually less impressive than it looks if you can remember April which posted a blowout $65B increase in revenue YOY... the last breath of 2017 pre-tax cut rates. Pull that out and we would have been negative 1.3%. But… it did happen… good for 2018, but when we start looking at 2019 YOY… it could get very ugly very fast, but who knows….


Outlays were the surprise for me…up 272B on the year good for a +6.4% increase over 2017. In”normal” year… if there is such a thing… I would say +4… which was my estimate 12 months ago, and will be my estimate for 2019 as well. Most of the increase is where you would expect… medicare, medicaid, and social security, but also interest was up big and growing fast as rates were increased… so expiring debt is being rolled into higher rates… for example, 3 month yield started the year at 1.29% and ended it over 1% higher at 2.44%… and all of this is off lows nearly 0% not so long ago. Put the big boys together with increases across the board and +6.4% wow!!…

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