The worsening U.S. budget deficit

As Kevin Drum pointed out in a June 27 blog post, the head of the White House National Economic Council, Larry Kudlow, had just said on Fox Business that economic growth had reduced the budget deficit. In fact, the deficit did decline as the economy improved in the Obama years, but the deficit so far this fiscal year is actually worse than last year.

When Drum wrote his blog post, the Treasury Department had released the data only through April, so I decided to look at updated numbers (now including May) and also check the numbers for the individual months of April and May. It appears that Kudlow may have been talking about just the month of April, which was the latest available in late June when Kudlow made his claim. April tends to be in surplus because that’s usually the top month for tax receipts, and April of 2018 had a larger surplus than April of 2017 — $214 billion, up from $182 billion in 2017.

That’s good, and it’s possible that economic growth was a contributing factor, but it could also be a matter of when people made their tax payments. The cumulative total amount of the surpluses and deficits from the start of the fiscal year in October through April is less subject to short-term variation, and unfortunately that number looks worse for 2018 than for 2017. (You can find the raw data on the Treasury website here.)

The deficit was also bigger in May of 2018 than the year before, and the cumulative October-through-May deficit is also bigger this year than last.

In the table below the numbers are in billions of dollars. Positive numbers indicate a budget surplus (more coming in than going out) and negative numbers mean a deficit.

Fiscal Year Apr May Oct-Apr Oct-May
2017 +182 -88 -344 -433
2018 +214 -147 -385 -532

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