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July budget numbers show revenues improving

Over the past 10 months, and on a rolling 12-month basis, the federal budget deficit has actually shrunk from $1.6 trillion to just over $1.3 trillion. As this chart shows, that's due to a combination of reduced expenditures and increasing revenues. Expenditures are still off the charts on an historical basis and relative to GDP, and that's bad, but the increase in revenues is a very welcome sign that the economy is on the mend. It's quite typical for revenues to decline in the wake of recessions, and then to come back once a decent recovery gets underway, and this time is no exception. Rising revenues mean that incomes and profits are up, and that only happens when the economy expands.

This next chart compares the above numbers to nominal GDP:

This last chart focuses on the difference between these two lines:

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