Saturday, May 13, 2017

UST Posts $182B surplus for April


"Deficit too small!" err, no... "Surplus too big!"  uhh, wait... I mean .... ahhhh I don't know what I mean... can someone get me a new slogan?!

I suppose we are all to believe that things are going to go all to hell now?





10 comments:

Penguin pop said...

So are you neutral on deficits and surpluses as ex post accounting metrics? What is the trade deficit looking like now compared to earlier this year? I have not looked up the numbers yet or the Daily Treasury Statement.

Matt Franko said...

Trade deficit still is high....

Here is news on Mexico:

https://twitter.com/pmanzo70/status/861365043698552834

10 year high with Mexico... China (USD zombies) sky high as usual...

Matt Franko said...

BTW here is Keen on this as bad news:

https://twitter.com/ProfSteveKeen/status/863010779473338373

Looks like Keen has joined on the "deficit too small!" concept bandwagon too...

Penguin pop said...

Well I'm not gonna jump to conclusions. We need to see how this will play out in the markets long-term too. You say the trade deficits are just as high as ever, and I assumed Trump wanted to drastically lower these to make this surplus plan work.

Matt Franko said...

Trump I'd assume is not happy about the recent increases in the trade deficits...

Ross is going all around the place this week trying to get the USD zombies to come off some of their hoards... (increase US exports)... good luck Wilbur!

Ryan Harris said...

April is always a surplus month. We'll get over it.

Dan Lynch said...

@Matt, the private sector is still in the black (on the whole) and Uncle Sam is still running a deficit for the year despite the occasional month in the black.

Breaking the private sector down into household vs. corporate, households are in the black while the corporate sector is in the red. However, corporations can run in the red for years before there is a correction.

In general, sectoral balances are not very useful for predicting recessions. We can look at a sectoral balances chart and say "in hindsight, this sector had too much debt and was bound to crash sooner or later," but in real time we can only say that a problem is brewing but no one knows when it will come to a head.

The next recession will probably be related to corporate debt rather than household debt. It might be triggered by a stock market crash or some other event that makes corporate investors panic.

Tom Hickey said...

The basic macroeconomic question is whether an economy is using available real resources efficiently and effectively, and if not, why not?

Government can always take steps fiscally to optimize resource use, including human resources, while maintaining a stable price level, by deploying functional finance for public purpose.

That's MMT in a nutshell.

This is a targeted approach, and the targeting is determined through the political process.

The fiscal balance adjusts automatically.

For currency sovereigns, the issue is never affordability or the size of the fiscal balance, but rather the degree of real resource optimization and deployment of resources for maximum effectiveness in terms of objectives, which are policy determined.

Matthew Franko said...

Well that is all well and good Tom but the fact remains that we have morons in there who think this means they now have more munnie....

Ignacio said...

Slogans are just slogans, they don't make reality. Everyone uses them because everyone loves to market their own ideas and ideologies in a packed (even if incomplete) way. Don't get too upset over shit like that.

Anyway, a single data point does not make a complete data set. What matters is the trend, if April is "always a surplus month" as Ryan says, who cares? What it's obvious is if surplus continues over several months (years) and trade deficit continues (as it will, as they incapable of curving it because "free markets") it won't bode well for the economy as it's a leakage of savings.

Dan makes a good point though about corporate finances, the thing is there is a wide margin to hide shit below the carpet for years when it comes to corporate finances, and to make indirect transfers from corporations to households, which has been happening and an extended practice in the last decades. If you been involved or have knowledge in a bankruptcy process or know about corporate finances you know this (pretty sure Trump is an expert on this too, LOL) and how the whole process can be deeply corrupt at many levels (misery breeds misery).

However, Dan, I question how far we are in the process and how weak the current corporate finances trully are on aggregate level, built on top of leverage and debt. There is a focus on high cap corporations (lot of them enjoying staying on top of cash even), but those (even in USA) make a fraction of the economic fabric. The deeper you go on the rabbit hole (Russell 3000, even SP500, smaller cap, not publicly traded small caps, etc.), you can get a sense of the process of high kurtosis society has been going over the last decade when it comes to income and wealth. Meaning that a small shock may as well collapse the low tiers of small/mid-cap corporations which are on very weak sustain.