The federal deficit in May reached $208 billion, surging 42 percent over last May’s monthly deficit figure, according to new Treasury Department data released Wednesday. The figure put the cumulative deficit for the eight months of fiscal 2019 at $739 billion, within range of the full 2018 deficit, which amounted to $779 billion, according to the Treasury figures. Treasury estimates that the full deficit will exceed $1 trillion by the time the fiscal year wraps up at the end of September.
We should not have a deficit of this size - 25 percent of total spending - smack in the heart of the strongest economy in decades:
Unemployment is at 3.9 percent, the lowest it has been since 1969;
Workforce compensation is increasing almost at three percent per year, faster than it has in ten years;
Workforce participation has finally stabilized, after declining steadily for over a decade;
In 34 states, unemployment is below four percent, and in eleven of those the rate is below three percent.
As I have explained before, this cyclical peak will soon come to an end, a point that makes the current budget deficit even more serious. With the latest Treasury budget report pointing to a $1.1-trillion deficit for the 2019 fiscal year, we are headed for a fiscal disaster once the inevitable recession comes.
- According to the Office of Management and Budget, the estimated budget deficit for 2019 is 20 percent of total federal spending;
- Total spending, in turn, is now above $3 trillion in the first eight months of a calendar year and will likely top $4 trillion for the whole year;
- A deficit of $1.1 trillion - as predicted by the Treasury - is 27.5 percent of outlays;
- Another ten percentage points of spending would add $400 billion, taking the deficit to $1.5 trillion.