Federal Budget: Government has its best quarter since 2022

The Federal Government publishes the spending and revenue numbers on a monthly basis. The charts and tables below give an in-depth review of the Federal Budget, showing where the money is coming from, where it is going to, and the surplus or deficit.

The government fiscal year closes at the end of September, but this analysis will look at the calendar year budget. As shown below, the last three months actually saw two surpluses. April is typically a surplus due to individual tax collections completing on April 15th. Last June saw a deficit of -$71B vs this year’s surplus of $27b. May saw a smaller deficit than last May by $31B.

I would not expect this pattern of smaller deficits and minor surpluses to continue given the massive spending bill that was just signed into law.

Figure: 1 Monthly Federal Budget

On average, April and June were better than average with May being way worse.

Figure: 2 Current vs Historical

We can look at the quarter in aggregate using the Sankey diagram below that shows the very modest $31B deficit!

The big concern with the chart below is how much Interest Expense has moved up, making up 14.6% of all spending in Q2.

Figure: 3 Quarterly Federal Budget Sankey

This latest quarter was the best quarter the US has had since Q2 of 2022.

Figure: 4 Quarterly Historical Deficit/Surplus for Previous Five Years

The next two charts show the quarterly revenue and costs broken down by expense type. The most recent quarter was a major uptick in receipts, driven primarily by individual income taxes and corporate tax receipts.

Figure: 5 Quarterly Receipts

On the flip side, you can see that spending has flatlined some over the last 5 quarters. While still very high, it’s good that it is not growing (yet).

Figure: 6 Quarterly Outlays

Interest Expense has ballooned higher to $948B on a trailing twelve-month basis.

Figure: 7 TTM Interest Expense

Historical Perspective

Zooming out and looking over the history of the budget back to 1980 shows a complete picture. The change since Covid is quite dramatic. But again, spending has flattened some while revenue has continued to climb.

Figure: 8 Trailing 12 Months (TTM)

The next two charts zoom in on the recent periods to show the change when compared to pre-Covid. These charts show spending and revenue on a trailing 12-month basis period over period. While the last 12 months was a record revenue number, so was spending.

Figure: 9 Annual Federal Receipts

Figure: 10 Annual Federal Expenses

Finally, we finish with a Sankey showing TTM Deficit was -$1.9B which is a massive issue going forward, representing 27% of all government spending. The government cannot afford to keep printing such massive debt figures.

Figure: 11 TTM Federal Budget Sankey

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