Treasury Runs Budget Surplus Of $105.8 Billion In September

The federal government ran a budget surplus of $105.8 billion during the month of September. This compares with a $75.1 billion surplus in September of 2013.

Treasury Monthly

Receipts for the month totaled $351.7 billion, up from $301.4 billion a year earlier. Total outlays were $245.9 billion from $226.43 billion a year earlier.

The rolling 12-month U.S. government budget deficit through September was $484.4 billion, an improvement from $515.1 billion in August. The rolling 12-month budget balance as a percentage of gross domestic product is -2.80%.

Budget Balance

Japan’s Struggling Exports

Japan

When a country’s currency loses nearly a quarter of its value, its exports normally pick up. The profound effect of depreciation on exports and on GDP can provoke currency wars and harsh words among central bankers. Yet in Japan the relationship has broken down. The yen is down by around 22% since the end of 2012, but rather than rising, export volumes actually fell by 1.5% in 2013 and by 0.4% between January and August this year. Why?

The mystery of Japan’s sluggish exports

Treasury Runs Budget Deficit of $128.7 Billion In August

The federal government ran a budget deficit of $128.7 billion during the month of August. This compares with a $147.9 billion deficit in August of 2013.

Treasury Activity

Receipts for the month totaled $194.2 billion, up from $185.4 billion a year earlier. Total outlays were $323.0 billion from $333.3 billion a year earlier.

The rolling 12-month U.S. government budget deficit through August was $515.1 billion, an improvement from $534.3 billion in July. The rolling 12-month budget balance as a percentage of gross domestic product is -2.98%.

Treasury Budget Balance

Structural Economic Reform And Financial Markets

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In late 2008, financial stress became widespread and perceptions of risk hit new highs. Concerns related to contagion among countries also had an increasing effect on premiums and increased the financing cost for many economies. The response to this problem was austerity – to stress the importance of getting the fiscal situation, and thereby the levels of debt of those countries with this problem, under control.

The returns to that effort, however, remain obscure. For example, some countries with increasingly large debt-to-GDP ratios benefit from historically low risk premiums, while several countries that applied radical measures to reduce their public debt still have to finance their debt at very high interest rates. France, for example, has a public-debt-to-GDP ratio that is expected to reach 91.8% in 2014. In July 2014, the country raised nearly €3.4 billion in ten-year bonds at the historically low rate of 1.77%.

Structural reform lowers country risk

One-Time Contributions To GDP

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GDP measures the new products or services provided in a specific window of time (e.g. the 3rd quarter of 2014, or all of 2013). If all the effort in producing a new product comes in development, but it is then copied for free, this means that there is a one-time contribution to GDP in the year it was developed, and then nothing afterwards.

Things like refrigerators, Diet Coke, and cars contribute to GDP every period because we have to make new versions of them over and over again. But in one sense that is a bug, not a feature. Imagine if, having invented Diet Coke, you could make copies for free. That would lower GDP, as Coca-Cola would drop to essentially zero revenue from here forward. But it’s demonstrably better, right? Free Diet Coke? Where do I put in the IV line?

Dietz Vollrath, Associate Professor of Economics at the University of Houston