Is anyone else tired of all the “recovery” talk and how retail sales are up, and jobs are improving? Here’s the deal. Same store sales are meaningless when dozens of chains went bankrupt and thousands of weak stores closed.
Moreover, alleged improvements in hiring do not mean diddly squat if income tax receipts are down.
With that backdrop please consider Budget Deficit in U.S. Widened to $82.7 Billion
The U.S. posted its largest April budget deficit on record as receipts declined in a month that typically sees an increase in individual income tax payments.
The excess of spending over revenue rose to $82.7 billion last month compared with a $20.9 billion gap in April 2009, the Treasury Department said today in Washington. It was the second April deficit since 1983 and exceeded the median forecast in a Bloomberg News survey.
April marked a record 19th straight monthly shortfall, highlighting the challenges facing the Obama administration. Deterioration in the government’s balance sheet in coming years raises the risk of higher interest rates even as an improving economy helps lift tax receipts.
“With the recovery in place, we should be seeing higher revenue and lower outlays, not the other way around,” said Win Thin, senior currency strategist at Brown Brothers Harriman & Co. in New York. For the deficit as a share of gross domestic product to decline this year, “we need to see some improvement in coming months,” he said.
The last time the U.S. had back-to-back April deficits was 1963-1964. The government has reported budget surpluses in 43 of the past 56 Aprils. For the fiscal year that began in October, the budget deficit totaled $799.7 billion compared with $802.3 billion during the same period last year.
Revenue and other income fell 7.9 percent to $245.3 billion in April from $266.2 billion the same month last year, the Treasury said.
Corporate tax receipts totaled $77.1 billion for the year to date, an increase of 8.9 percent. Individual income tax collections were down 11.6 percent so far this fiscal year to $500.8 billion.
The Treasury is beginning to get a lift from an expanding economy as it emerges from the worst recession since the 1930s. The economy grew 3.2 percent from January through March, the third straight quarter of growth, helping the government to cut long-term borrowing for the first time since 2007.
Lift!? What “Lift” Are You Talking About?
Lift? Where the fook is the lift? The only lift is in stimulus that is now sinking like a lead balloon. Here is a case in point: Home Buyer Tax Credit Takes its Toll
As the end of the home buyer tax credit neared last month, we all argued whether or not the increase in sales and the relative price stabilization could survive on their own.
The first clues indicate the answer is: No.
Metros With Price Reduction Levels of 30% or More
We expect to hit turbulence in some markets,” says Pete Flint, Trulia co-founder and CEO. “We won’t know the true severity of the tax credit expiration until the conclusion of the peak home buying season in the summer months. Only then will we have a better sense if the U.S. housing market can stand on its own two feet.”
It should be perfectly obvious neither housing nor the recovery can stand on its own two feet without round after round of stimulus measures.
April marked a record 19th straight monthly shortfall, highlighting the challenges facing the Obama administration. Corporate tax receipts totaled $77.1 billion for the year to date, an increase of 8.9 percent. However, please remember corporate profits reflect profits, not wages paid to employees.
More importantly, individual income tax collections were down 11.6 percent so far this fiscal year to $500.8 billion.
Believe what you want, but I refuse to believe a recovery is in progress when federal income tax collections are off $65 billion dollars, and state after state is still showing declining revenue.
Mike “Mish” Shedlock
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