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The budget picture continues to improve

Here's a quick update for the Federal budget numbers released today. The good news is that revenues really seem to have bottomed out and to now be increasing. That's not too unusual given the nature of the recession, and it confirms the good news that we have been seeing; namely that employment and incomes are picking up. The bad news is that spending appears to be stuck at a relatively high plateau, and is likely to increase further if an extension to unemployment benefits is passed, and if Obamacare is actually implemented. For now the budget deficit has subsided to 9.5% of GDP, but that is still a very large number given that the U.S. economy is by far the biggest in the world. This is going to be a festering problem that will take a long time to fix.

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