Posted on October 1, 2020
The Treasury Department just released the final Daily Treasury Statement for September and hence for fiscal year 2020. By my estimate, total federal revenues for FY 2020 were down by 1.2 percent. That consists of revenues being up by about 6 percent in the first half of the year from October through March (compared to the same period of the prior year), and then being down by about 7 percent in the second half from April through September. The estimated 1.2 percent decline for the year is very close to the 1.5 percent decline that we extrapolated back a week and a half ago. There is some uncertainty around that estimate for a 1.2 percent decline, because there are a few items, probably not big at this point, that I cannot ascertain from the Daily Treasury Statements. The official tabulation will be released by the Treasury Department probably on October 13, although the Congressional Budget Office will give its own, typically very close estimate probably in the middle of next week in its Monthly Budget Review. Although receipts were down substantially in the second half of the fiscal year, receipts more recently have been recovering: we posted earlier this week about the gradual recovery in tax withholding in recent months; and we posted at the beginning of the week about how quarterly payments of income taxes by individuals picked up a bit in September. Corporate income tax payments also recovered somewhat in September, as we discussed last week. Total receipts for September look to be close to those from September 2019.
As we’ve discussed in several posts, revenues took a nosedive in April as a result of the economic hit from the pandemic, and from administrative and legislative actions in response. Administratively, the IRS postponed certain payments normally due during the April to June period until July. At that point, when the payment delays expired, revenues rebounded but remained down for the full fiscal year (see chart below).
