Newsomnomics! US Deficit Tops $1.1 Trillion For First Six Months Of Fiscal 2024 As Spending Hits 2024 High (Producer Prices Rose At Fastest Pace In A Year In March)

It looks like “10% Joe” Biden is an older, more demented version of California Governor “Greasy” Gavin Newsom. They both loved spending taxpayer money and running up enomous budget deficits.

Under Biden’s “Reign of Error”, the interest on US debt just hit a record $1.1 trillion and the US deficit for just the first six months of fiscal 2024 is also $1.1 trillion.

According to the latest Treasury Monthly Statement, in March the US deficit hit $236 billion, some $40 billion more than the $196 billion expected, if below February’s $296 billion…

… which was the result of $332 billion in govt tax receipts – translating into $4.580 trillion in LTM tax receipts, and which was down 5% compared to a year ago…

… offset by the now traditional ridiculous monthly outlays, which in March amounted to $568 billion, up from $567 billion in February and the highest monthly spending total in calendar 2024, which translated into a 6 month moving spending average (for smoothing purposes) of $542 billion. Take a wild guess what will happen to the chart below during and after the next recession.

This, incidentally, is a reminder that the US does not have a tax collection problem – it has a spending problem, and no amount of tax changes will fix it; in fact all higher taxes will do is force more billionaires to move to Dubai where they pay zero taxes.

Putting the YTD deficit in context, in the first six months of fiscal 2024, the US deficit hit $1.065 trillion, just shy of the $1.1 trillion reached last year, which was the 2nd highest on record and only the post-covid 2021 was worse. Annualized, we expect total deficit to hit $2.2 trillion in fiscal 2024, a year when the US is supposedly “growing” at a nice, brisk ~2.5% pace. One can only imagine what the GDP growth would be if the US wasn’t set to have a wartime/crisis deficit…

… and we can’t even imagine what US deficit will be after the next recession/depression.

Meanwhile, as reported previously, total US interest continues to explode, and after surpassing total annual defense spending about a year ago, just the interest on US debt will soon become the single largest government outlay as it surpasses social security by the end of 2024, when according to BofA’s Michael Hartnett it hits $1.6 trillion…

.. and surpasses Social Security spending as the single largest spending category in the US government.

Biden has wanted to get rid of Social Security for a long-time and now wants to get rid of Medicare Advantage programs and put everyone on Medicare. Looks like Cloward-Piven!

On top of skyroceting budget deficits, we have Producer Prices rising at fastest pace in a year in March.

After yesterday’s CPI-surge, PPI followed along, with headline producer prices rising 0.2% MoM (+0.3% MoM exp), pushing the YoY PPI to +2.1% (+2.2% exp) from +1.6% – the highest since April 2023…

Source: Bloomberg

Core CPI rose 2.4% YoY (hotter than the expected 2.3%) – the third hotter-than-expected core PPI print in a row…

Under the hood, Services prices rose while goods prices declined MoM.

One thing that stands out as rather odd is the 1.6% MoM decline in Energy costs in the month… as prices soared for crude and gasoline?

Leading the March decline in the index for final demand goods, prices for gasoline decreased 3.6 percent…

And blame the markets for why the print was hot:

A major factor in the March increase in prices for final demand services was the index for securities brokerage, dealing, investment advice, and related services, which rose 3.1 percent.

And on a YoY basis, Services costs are accelerating…

Pressure continues to build in the inflation pipeline too…

While some may cling with grim hope to the ‘cooler than expected’ headline PPI print, core PPI is hot, damn hot, and headline PPI is rising. Not at all what The Fed, or Biden, wants to see – no matter how hard they spin it.