US Record Smallest Monthly Budget Deficit Since December 2019

After spending like a drunken sailor over the past two years, and even launching helicopter money to fund its unprecedented spending spree in the post-covid era, the US has become borderline austere in recent months.

According to the latest Treasury monthly statement, in December, the US budget deficit was a paltry $21.3 billion, which while slightly more than expectations of a just $5 billion deficit, was a huge drop from the $143.6 billion deficit record in December 2020. The deficit was the result of $487 billion in receipts, a whopping increase of 40.6% Y/Y and $508 billion in outlays, which was just a 3.7% increase vs a year ago.

The December deficit of $21.3 billion was also the smallest deficit going back to December 2019.

On a year to date basis, in the first three months of fiscal 2022, the US has collected $1.052 trillion while spending $1.430 trillion, for a cumulative deficit of $378 billion.

While overall spending was not at the insane level observed in the aftermath of the covid pandemic, when the Treasury was funding various stimmy plans, it is still about $100 billion higher than the biggest pre-covid spending month.

The good news is that in December, receipts clearly jumped and were also one of the highest on record excluding the traditionally strongest month of April when taxes are due.

Finally, on a cumulative basis, the insanity of the second half of fiscal 2020 and 2021 appear to be over, because the YTD deficit of $377.7 billion was in line with pre-covid years and far below the $573 billion cumulative deficit that was record one year ago.