Government Receipts and Expenditures

Fourth Quarter of 2018

By Kelly Ramey  |  Volume 99, Number 4  |  April 16, 2019

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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 −$1,265.2 billion in the fourth quarter of 2018, decreasing $73.1 billion from −$1,192.1 billion in the third 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 $1,375.1 billion in the fourth quarter, increasing $50.1 billion from $1,325.0 billion in the third 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 2018 2018 2018 2018
IV I II III IV
1 Current receipts 5,592.6 −88.3 47.4 116.3 15.8
2 Current expenditures 6,857.8 63.5 83.2 72.2 89.0
3 Net government saving −1,265.2 −151.7 −35.9 44.0 −73.1
4 Federal −1,002.2 −166.3 −23.8 33.1 −41.6
5 State and local −263.1 14.5 −12.0 10.9 −31.6
6 Net lending or net borrowing (−) −1,375.1 −1,153.4 −46.2 20.9 −50.1
7 Federal −1,058.8 −1,164.0 −25.7 8.0 −21.3
8 State and local −316.3 10.6 −20.5 13.0 −28.9

Net federal government saving was −$1,002.2 billion in the fourth quarter, decreasing $41.6 billion from −$960.6 billion in the third quarter (table 2). In the fourth quarter, current receipts decelerated, and current expenditures accelerated.

Federal government net borrowing was $1,058.8 billion in the fourth quarter, increasing $21.3 billion from $1,037.5 billion in the third quarter.

  • Personal current taxes (line 3) decelerated in the fourth quarter, reflecting the pattern of wages.
  • Taxes on production and imports (line 4) accelerated in the fourth quarter, reflecting an acceleration in customs duties. In addition to the tariff increases implemented earlier this year, new tariffs on certain imported goods from China began in late September.
  • Taxes on corporate income (line 5) turned down in the fourth quarter, reflecting a downturn in corporate profits.
  • Contributions for government social insurance (line 7) decelerated in the fourth quarter, reflecting the pattern of wages.
  • Income receipts on assets (line 8) turned down in the fourth quarter, reflecting a deceleration in dividends from Fannie Mae and Freddie Mac.
  • Current transfer receipts (line 9) turned down in the fourth quarter. Third-quarter receipts had been boosted by 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 in the third quarter.
  • Government social benefits to persons (line 17) accelerated in the fourth quarter, reflecting an acceleration in Social Security and Medicare benefits.
  • Grants-in-aid to state and local governments (line 20) turned down in the fourth quarter, reflecting a downturn in Medicaid grants and other health grants.
  • Other current transfer payments to the rest of the world (line 21) turned up in the fourth quarter, reflecting economic support payments to Egypt and Israel; there were no support payments in the third quarter.
  • Interest payments (line 22) decelerated in the fourth quarter, reflecting a downturn in interest paid on Treasury Inflation Protected Securities.
  • Subsidies (line 23) accelerated in the fourth quarter, reflecting an acceleration in agricultural subsidies from the U.S. Department of Agriculture’s Market Facilitation Program, which provides relief from tariffs for certain farm products.
  • Capital transfer payments (line 33) turned down; third-quarter transfers were boosted by 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.
  • Net purchases of nonproduced assets (line 34) turned down in the fourth quarter, reflecting an acceleration in bonuses received for onshore gas and oil leases.
Table 2. Federal Government Current Receipts and Expenditures
(Billions of dollars, seasonally adjusted at annual rates)
Line   Level Change from preceding quarter
2018 2018 2018 2018 2018
IV I II III IV
1 Current receipts 3,569.5 −105.3 27.9 91.3 22.0
2 Current tax receipts 2,018.8 −149.2 27.8 37.3 44.9
3 Personal current taxes 1,648.2 −49.4 15.3 26.1 22.9
4 Taxes on production and imports 180.7 15.6 2.5 6.9 21.8
5 Taxes on corporate income 160.9 −115.4 9.1 4.6 −1.8
6 Taxes from the rest of the world 29.1 −0.1 1.0 −0.3 2.1
7 Contributions for government social insurance 1,364.5 26.0 8.7 14.7 13.6
8 Income receipts on assets 126.5 13.3 −9.6 13.8 −0.1
9 Current transfer receipts 69.0 7.5 2.9 25.2 −36.2
10 Current surplus of government enterprises −9.4 −3.0 −1.8 0.2 −0.3
11 Current expenditures 4,571.7 61.0 51.7 58.2 63.6
12 Consumption expenditures 1,046.2 14.8 15.2 13.4 4.9
13 National defense 637.6 8.1 11.8 10.2 9.0
14 Nondefense 408.5 6.5 3.5 3.2 −4.2
15 Current transfer payments 2,874.1 45.5 28.7 24.3 21.0
16 Government social benefits 2,242.3 36.8 16.6 23.3 30.2
17 To persons 2,219.4 36.5 16.6 23.2 30.3
18 To the rest of the world 22.8 0.3 0.0 0.1 −0.2
19 Other current transfer payments 631.8 8.8 12.1 1.0 −9.2
20 Grants-in-aid to state and local governments 569.6 18.0 −2.6 10.4 −17.4
21 To the rest of the world 62.2 −9.2 14.7 −9.4 8.2
22 Interest payments 566.7 4.4 9.0 19.9 12.3
23 Subsidies 84.7 −3.6 −1.3 0.7 25.3
24 Net federal government saving −1,002.2 −166.3 −23.8 33.1 −41.6
25 Social insurance funds −380.8 −7.6 −10.2 −9.5 −16.9
26 Other −621.4 −158.6 −13.7 42.6 −24.7
Addenda:
27 Total receipts 3,592.3 −1,105.0 26.1 91.2 21.9
28 Current receipts 3,569.5 −105.3 27.9 91.3 22.0
29 Capital transfer receipts 22.8 −999.7 −1.8 −0.1 −0.1
30 Total expenditures 4,651.0 59.0 51.8 83.3 43.0
31 Current expenditures 4,571.7 61.0 51.7 58.2 63.6
32 Gross government investment 295.8 −0.4 2.9 3.1 7.6
33 Capital transfer payments 73.0 −0.1 −0.6 24.2 −23.5
34 Net purchases of nonproduced assets −3.3 0.1 −0.2 0.1 −2.7
35 Less: Consumption of fixed capital 286.0 1.6 2.1 2.3 1.7
36 Net lending or net borrowing (−) −1,058.8 −1,164.0 −25.7 8.0 −21.3

 

Net state and local government saving was −$263.1 billion in the fourth quarter, decreasing $31.6 billion from −$231.5 billion in the second quarter. In the fourth quarter, current receipts turned down, and current expenditures decelerated (table 3).

State and local government net borrowing was $316.3 billion, increasing $28.9 billion from $287.4 billion in the third quarter.

  • Personal current taxes (line 3) turned down in the fourth quarter, reflecting a downturn in personal income taxes.
  • Taxes on corporate income (line 5) turned down in the quarter, reflecting a downturn in corporate profits.
  • Federal grants-in-aid (line 9) turned down in the fourth quarter, reflecting a downturn in grants for Medicaid and other health programs.
  • Government social benefits (line 14) turned down in the fourth quarter, reflecting a downturn in Medicaid benefits.
  • Capital transfer receipts (line 22) turned down in the fourth quarter; third-quarter transfers were boosted by $0.8 billion ($3.2 billion at an annual rate) in disaster-related insurance benefits for Hurricane Florence.
  • Gross government investment (line 25) turned down in the fourth quarter, reflecting downturns in investment for structures and equipment.
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 2018 2018 2018 2018
IV I II III IV
1 Current receipts 2,592.7 35.0 16.8 35.5 −23.6
2 Current tax receipts 1,770.6 14.3 17.0 22.7 −13.2
3 Personal current taxes 422.8 8.5 −10.0 3.5 −16.8
4 Taxes on production and imports 1,288.3 12.3 13.0 14.9 12.0
5 Taxes on corporate income 59.5 −6.3 13.9 4.4 −8.5
6 Contributions for government social insurance 22.1 0.3 0.3 0.3 0.2
7 Income receipts on assets 87.7 −0.2 0.6 0.3 0.2
8 Current transfer receipts 716.5 20.1 −0.7 12.4 −10.4
9 Federal grants-in-aid 569.6 18.0 −2.6 10.4 −17.4
10 Other 146.9 2.2 2.0 1.9 7.0
11 Current surplus of government enterprises −4.2 0.3 −0.3 −0.2 −0.4
12 Current expenditures 2,855.8 20.5 28.9 24.5 8.0
13 Consumption expenditures 1,834.8 16.4 18.7 19.7 12.0
14 Government social benefits 743.7 7.8 13.1 6.9 −2.8
15 Interest payments 276.7 −3.7 −3.0 −2.1 −1.2
16 Subsidies 0.6 0.0 0.0 0.0 0.0
17 Net state and local government saving −263.1 14.5 −12.0 10.9 −31.6
18 Social insurance funds 4.6 0.1 0.1 0.1 0.1
19 Other −267.7 14.4 −12.2 10.9 −31.7
Addenda:
20 Total receipts 2,664.0 35.2 16.6 42.9 −29.1
21 Current receipts 2,592.7 35.0 16.8 35.5 −23.6
22 Capital transfer receipts 71.3 0.1 −0.2 7.5 −5.6
23 Total expenditures 2,980.2 24.7 37.1 29.9 −0.4
24 Current expenditures 2,855.8 20.5 28.9 24.5 8.0
25 Gross government investment 392.8 7.1 12.9 7.7 −5.4
26 Capital transfer payments ...... ...... ...... ...... ......
27 Net purchases of nonproduced assets 14.9 0.2 0.3 0.3 0.3
28 Less: Consumption of fixed capital 283.2 3.3 4.8 2.8 3.1
29 Net lending or net borrowing (−) −316.3 10.6 −20.5 13.0 −28.9