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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (7860)2/12/2004 2:51:01 PM
From: ild  Read Replies (1) of 110194
 
The U.S. Treasury reported that the federal budget posted a $1.4 billion deficit in January, somewhat weaker than the consensus forecast for a slight surplus. January typically shows a surplus because of heavy estimated tax payments. Indeed, individual income tax receipts were down 8.2 percent in January versus a year ago. At the same time, the level of corporate income tax receipts were three times as large as a year ago. However, corporate income taxes are minuscule relative to individual taxes and thus were not able to offset the sharp drop. On a year-to-date basis, individual income taxes are 2.6 percent lower than for the same four month period a year ago; corporate income taxes are 39.1 percent higher than for the same four month period a year ago.

On the outlays side, defense expenditures are up 15.9 percent versus last year (for the four months of the fiscal year). Medicare outlays are 2.2 percent higher than last year for the four month period, while social security outlays are 3.7 percent higher than a year ago. A low interest rate environment continues to help the Treasury as net interest costs are down 4.3 percent from the same four month period a year ago.

All in all, the fiscal year-to-date is showing a deficit of $130 billion compared with a $97.6 billion deficit for the same period a year ago. This should be negative for interest rates, but as long as foreigners continue to purchase our securities, rate increases will be curtailed.
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