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September 13, 2006
A Warning Sign In The Deficit Report?
I guess how you feel about today's news on the August federal deficit report depends on your perspective. Reuters led with the observation that the ink was a little redder than expected...
The U.S. government posted a larger-than-expected $64.61 billion federal budget deficit in August as outlays for the month were at a record high, a Treasury Department report showed on Wednesday.
The August deficit compared with a $51.33 billion deficit in August 2005.
Wall Street economists polled by Reuters were expecting a $61.15 billion deficit for the month.
... while AFX News Limited (via Forbes) kicked off with a cheerier perspective:
The federal deficit through August held below last year's level and continued on its course for a smaller yearly deficit this year than last, the Treasury Department said.
The government posted a budget deficit of 64.6 bln usd in August, compared to expectations of a 67 bln usd monthly deficit.
Through the first 11 months of the budget year, the deficit was 304.3 bln usd, down 14 pct from the same period in 2005, when it totaled 354.1 bln usd.
I don't doubt that someone out there in blogland will point out that, in the even longer run, the federal budget remains in a state of some disrepair. But, for the moment, I am decidedly focused on the short run, and trying to figure out exactly how the economic outlook is evolving. From that perspective, this detail from Action Economics (subscription required) is not encouraging:
Receipts were weak, declining 1.0% or $1.6 bln to $153.9 bln. Weakness was led by a drop in individual income. This marks the first time since April of 2004 that receipt growth has been negative.
OK, I'll remind myself that one month does not a trend make, and maybe encourage myself with this report, from Greg Ip and Christopher Conkey at The Wall Street Journal Online:
The recent drop in oil prices could provide a welcome and surprising boost to consumer pocketbooks this fall, cushioning the economy from a falloff in home prices and construction while venting an important source of inflation pressure.
The easing of energy prices is an unexpected -- and little-noted -- positive amid economic anxiety over falling housing activity, previous energy-price increases and the possibility of recession.
Crude oil was at $77 a barrel as recently as early August. Yesterday, the price of the October crude-oil future contract settled at $63.76, a near six month low, down $1.85 from Monday, on the New York Mercantile Exchange.
Ahh. I feel better already.
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