Government Receipts and Expenditures

Third Quarter of 2018

Prepared by Kelly Ramey  |  Volume 98, Number 12  |  December 19, 2018

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Net government saving, the difference between current receipts and current expenditures in the federal government and state and local governments, was −$1,194.1 billion in the third quarter of 2018, increasing $42.0 billion from −$1236.1 billion in the second quarter of 2018 (charts 1 and 2 and table 1).

“Net lending or net borrowing (−)” is an alternative measure of the government fiscal position. Net borrowing is the financing requirement of the government sector, and it is derived as net government saving plus the consumption of fixed capital and net capital transfers received less gross investment and net purchases of nonproduced assets.

Net borrowing was $1,327.3 billion in the third quarter, decreasing $18.6 billion from $1,345.9 billion in the second quarter (charts 3 and 4 and table 1).

Chart 1. Current Receipts and Expenditures: Change From Preceding Quarter

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Chart 2. Net Saving

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Chart 3. Total Receipts and Expenditures: Change From Preceding Quarter

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Chart 4. Net Lending or Net Borrowing

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Table 1. Net Government Saving and Net Lending or Net Borrowing
(Billions of dollars, seasonally adjusted at annual rates)
Line   Level Change from preceding quarter
2018 2017 2018 2018 2018
III IV I II III
1 Current receipts 5,574.1 −22.6 −88.3 47.4 113.6
2 Current expenditures 6,768.2 110.6 63.5 83.2 71.6
             
3 Net government saving −1,194.1 −133.2 −151.7 −35.9 42.0
4 Federal −967.3 −143.1 −166.3 −23.8 26.4
5 State and local −226.8 9.8 14.5 −12.0 15.6
             
6 Net lending or net borrowing (−) −1,327.3 920.6 −1,153.4 −46.2 18.6
7 Federal −1,044.2 925.8 −1,164.0 −25.7 1.3
8 State and local −283.1 −5.2 10.6 −20.5 17.3

Net federal government saving was −$967.3 billion in the third quarter, increasing $26.4 billion from −$993.7 billion in the second quarter (table 2). In the third quarter, both current receipts and current expenditures accelerated.

Federal government net borrowing was $1,044.2 billion in the third quarter, decreasing $1.3 billion from $1,045.5 billion in the second quarter.

  • Personal current taxes (line 3) accelerated in the third quarter, reflecting the pattern of wages.
  • Taxes on production and imports (line 4) accelerated in the third quarter, reflecting an acceleration in customs duties. New tariffs were introduced on steel, aluminum, and other products in the first and second quarters.
  • Taxes on corporate income (line 5) decelerated in the third quarter, reflecting a deceleration in corporate profits.
  • Contributions for government social insurance (line 7) accelerated in the third quarter, reflecting the pattern of wages.
  • Income receipts on assets (line 8) turned up in the third quarter, reflecting an acceleration in dividends from Fannie Mae and Freddie Mac and a smaller decrease in remittances paid by the regional Federal Reserve Banks.
  • Current transfer receipts (line 9) accelerated in the third quarter, reflecting a $2.1 billion ($8.4 billion at an annual rate) settlement with Wells Fargo and a $4.9 billion ($19.6 billion at an annual rate) settlement with the Royal Bank of Scotland.
  • Government social benefits to persons (line 17) accelerated in the third quarter, reflecting an acceleration in Medicare benefits.
  • Grants-in-aid to state and local governments (line 20) turned up, reflecting an acceleration in Medicaid grants and an upturn in other health grants.
  • Other current transfer payments to the rest of the world (line 21) turned down in the third quarter; second-quarter transfers were boosted by economic support payments to Egypt and Israel.
  • Interest payments (line 22) accelerated in the third quarter, reflecting an upturn in the interest on Treasury Inflation Protected Securities.
  • Capital transfer payments (line 33) turned up, reflecting the payment of $5.0 billion ($20.0 billion at an annual rate) in disaster-related insurance benefits from the National Flood Insurance Program for Hurricane Florence.
Table 2. Federal Government Current Receipts and Expenditures
(Billions of dollars, seasonally adjusted at annual rates)
Line   Level Change from preceding quarter
2018 2017 2018 2018 2018
III IV I II III
1 Current receipts 3,541.8 −56.7 −105.3 27.9 85.6
2 Current tax receipts 1,970.4 −21.7 −149.2 27.8 33.8
3 Personal current taxes 1,622.8 7.4 −49.4 15.3 23.6
4 Taxes on production and imports 159.0 1.7 15.6 2.5 7.0
5 Taxes on corporate income 161.7 −31.6 −115.4 9.1 3.6
6 Taxes from the rest of the world 27.0 0.8 −0.1 1.0 −0.3
7 Contributions for government social insurance 1,348.6 11.0 26.0 8.7 12.4
8 Income receipts on assets 126.7 −20.0 13.3 −9.6 13.9
9 Current transfer receipts 105.2 −23.6 7.5 2.9 25.2
10 Current surplus of government enterprises −9.1 −2.4 −3.0 −1.8 0.2
             
11 Current expenditures 4,509.1 86.3 61.0 51.7 59.2
12 Consumption expenditures 1,041.3 13.2 14.8 15.2 13.4
13 National defense 628.6 6.2 8.1 11.8 10.2
14 Nondefense 412.7 7.1 6.5 3.5 3.2
15 Current transfer payments 2,852.9 17.9 45.5 28.7 24.1
16 Government social benefits 2,211.8 14.5 36.8 16.6 23.0
17 To persons 2,188.9 13.7 36.5 16.6 23.0
18 To the rest of the world 23.0 0.9 0.3 0.0 0.1
19 Other current transfer payments 641.0 3.3 8.8 12.1 1.0
20 Grants-in-aid to state and local governments 587.0 −6.1 18.0 −2.6 10.4
21 To the rest of the world 54.0 9.3 −9.2 14.7 −9.4
22 Interest payments 555.6 54.1 4.4 9.0 21.1
23 Subsidies 59.4 1.1 −3.6 −1.3 0.7
             
24 Net federal government saving −967.3 −143.1 −166.3 −23.8 26.4
25 Social insurance funds −365.6 −2.5 −7.6 −10.2 −11.2
26 Other −601.7 −140.5 −158.6 −13.7 37.6
             
Addenda:
27 Total receipts 3,564.7 944.5 −1,105.0 26.1 85.5
28 Current receipts 3,541.8 −56.7 −105.3 27.9 85.6
29 Capital transfer receipts 22.9 1,001.3 −999.7 −1.8 −0.1
30 Total expenditures 4,608.9 18.7 59.0 51.8 84.2
31 Current expenditures 4,509.1 86.3 61.0 51.7 59.2
32 Gross government investment 288.2 3.5 −0.4 2.9 3.1
33 Capital transfer payments 96.5 −76.2 −0.1 −0.6 24.2
34 Net purchases of nonproduced assets −0.6 6.7 0.1 −0.2 0.1
35 Less: Consumption of fixed capital 284.3 1.5 1.6 2.1 2.3
36 Net lending or net borrowing (−) −1,044.2 925.8 −1,164.0 −25.7 1.3

Net state and local government saving was −$226.8 billion in the third quarter, increasing $15.6 billion from −$242.4 billion in the second quarter. In the third quarter, current receipts accelerated, and current expenditures decelerated (table 3).

State and local government net borrowing was $283.1 billion, decreasing $17.3 billion from $300.4 billion in the second quarter.

  • Personal current taxes (line 3) turned up in the third quarter, reflecting an upturn in personal income taxes.
  • Taxes on corporate income (line 5) decelerated in the third quarter, reflecting a deceleration in corporate profits.
  • Federal grants-in-aid (line 9) turned up in the third quarter, reflecting an acceleration in Medicaid grants and an upturn in other health grants.
  • Government social benefits (line 14) decelerated in the third quarter, reflecting a deceleration in Medicaid benefits.
  • Capital transfer receipts (line 22) turned up in the third quarter, reflecting $0.8 billion ($3.2 billion at an annual rate) in disaster-related insurance benefits for Hurricane Florence.
  • Gross government investment (line 25) decelerated in the third quarter, reflecting a deceleration in structures investment.
Table 3. State and Local Government Current Receipts and Expenditures
(Billions of dollars, seasonally adjusted at annual rates)
Line   Level Change from preceding quarter
2018 2017 2018 2018 2018
III IV I II III
1 Current receipts 2,619.3 28.0 35.0 16.8 38.5
2 Current tax receipts 1,786.6 31.8 14.3 17.0 25.5
3 Personal current taxes 439.7 15.0 8.5 −10.0 3.6
4 Taxes on production and imports 1,276.6 14.6 12.3 13.0 15.2
5 Taxes on corporate income 70.3 2.1 −6.3 13.9 6.7
6 Contributions for government social insurance 21.9 0.4 0.3 0.3 0.3
7 Income receipts on assets 87.7 0.6 −0.2 0.6 0.5
8 Current transfer receipts 726.9 −4.3 20.1 −0.7 12.4
9 Federal grants-in-aid 587.0 −6.1 18.0 −2.6 10.4
10 Other 139.9 1.7 2.2 2.0 1.9
11 Current surplus of government enterprises −3.9 −0.4 0.3 −0.3 −0.3
             
12 Current expenditures 2,846.1 18.2 20.5 28.9 22.8
13 Consumption expenditures 1,822.6 20.5 16.4 18.7 19.5
14 Government social benefits 744.9 −2.6 7.8 13.1 5.3
15 Interest payments 278.0 0.4 −3.7 −3.0 −2.0
16 Subsidies 0.6 0.0 0.0 0.0 0.0
             
17 Net state and local government saving −226.8 9.8 14.5 −12.0 15.6
18 Social insurance funds 4.5 0.1 0.1 0.1 0.1
19 Other −231.3 9.7 14.4 −12.2 15.6
             
Addenda:
20 Total receipts 2,696.1 15.5 35.2 16.6 45.9
21 Current receipts 2,619.3 28.0 35.0 16.8 38.5
22 Capital transfer receipts 76.8 −12.5 0.1 −0.2 7.4
23 Total expenditures 2,979.2 20.7 24.7 37.1 28.5
24 Current expenditures 2,846.1 18.2 20.5 28.9 22.8
25 Gross government investment 398.6 9.4 7.1 12.9 8.1
26 Capital transfer payments ...... ...... ...... ...... ......
27 Net purchases of nonproduced assets 14.6 0.2 0.2 0.3 0.3
28 Less: Consumption of fixed capital 280.1 2.1 3.3 4.8 2.8
29 Net lending or net borrowing (−) −283.1 −5.2 10.6 −20.5 17.3