The lack of a budget agreement in the US is not stopping the US Treasury Department from spending at an unrestricted pace - spending for October totaled $589bn, up 18%, nearly 25% YoY in two years, and higher than all previous years, even during the 2020 - 2021 period of fiscal extremism.
Weak Revenues and November Deficit
Meanwhile, revenues remain weak at $275 bln (+9% y/y), 2.3% below November 2021 levels. This has led to the accumulation of a record budget deficit in November - $314bn vs. $248bn in 2022, $191bn in 2021, and $145bn in 2020 (for November).
Over the past twelve months, budget revenues totaled $4.55 trillion vs. $4.9 trillion in 2022 (minus 7.2%) and $4.15 trillion in 2021 (+9.6% over two years).
Twelve-month budget spending is $6.3 trillion or $6.6 trillion including paper write-offs of student loan advances vs. $6.26 trillion a year earlier ($5.93 trillion including advances), meaning spending is up 11.3%.
The Historical High in Annual Spending
The highest annual spending figure in history was recorded two years ago at $6.86 trillion, meaning a resumption of the post-Kowitz period of fiscal extremism is now well underway.
As a result, the adjusted budget deficit for the year was $2 trillion, which, when adjusted for inflation, exceeds the crisis programs of 2009 - 2011!
One reason for the resilience of the U.S. economy is weak tax collections with near-record spending, which forms an excessive budget deficit and a significant fiscal headwind for the economy.
The main driver of spending growth is crisis loans and subsidies (trade and housing loans), which rose $62 billion in October-November from a year earlier (mostly FDIC contributions).
Net interest expense increased $57 billion in October - November from a year earlier, accounting for 38% of the total $151 billion increase in spending.
The third major category is Social Security + Veterans benefits and services, which rose $32 billion in the two months. Defense + $19 billion and Medicare + $15 billion.
Conclusion
In conclusion, the absence of a budget agreement in the U.S. has led to unchecked spending, resulting in record-high deficits. October spending reached $589 billion, while revenues remained weak at $275 billion, causing a November deficit of $314 billion. These fiscal trends, driven by excessive spending and weak tax collections, pose a significant economic challenge for the country's long-term stability.