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Did the U.S. government just achieve a surplus?

A closer look at our national accounts

Almost all governments run deficits, so it’s a big deal when a government achieves a surplus. This graph includes data for all levels of U.S. government (local, state, and federal) on the net result of their lending and borrowing: A net deficit appears below the zero line, and a net surplus appears above the zero line. Notice the sudden jump in the fourth quarter of 2017 that reaches just above zero? This is a seasonally adjusted data series, by the way, so this jump has nothing to do with the regular influx of tax payments as the filing deadline approaches. (And that particular seasonal jump is in the second quarter, anyway.) So what’s going on here?

This jump from deficit to surplus has to do with the 2017 Tax Cuts and Jobs Act. One of its provisions is a one-time tax of foreign corporate earnings from 1986 to 2017. The so-called repatriation tax. This one-time capital transfer from businesses to government is estimated by the Bureau of Economic Analysis to be about $250 billion. Converted to annual rates, this implies a $1 trillion jump in government revenue in the fourth quarter that will not happen again. If we deduct this $1 trillion, the series actually moves downward from the third quarter’s value.

How this graph was created: Search for “net lending,” click on the government series, then select “Add to Graph.”

Suggested by Christian Zimmermann.

View on FRED, series used in this post: AD01RC1Q027SBEA

What’s the return on a certificate of deposit?

A look at CDs for our CDth blog post

We’re celebrating our 400th FRED Blog post by writing about the certificate of deposit—which is abbreviated as CD, which is also Roman for 400.

A CD is a savings vehicle that allows anyone to earn a little more interest than regular savings accounts provide. And the longer you commit your savings to a CD, the more interest you get. The Federal Deposit Insurance Company—which is abbreviated as FDIC, which is also Roman for F599—collects information about CDs in all its member banks and averages them in two categories: jumbo (over $100,000) and non-jumbo. This graph shows all the non-jumbo maturities listed in FRED. By the way, jumbo CDs offer a slightly higher return, which you can see if you create another graph.

How this graph was created: Search for “CD rate,” check the series you want, and click “Add to Graph.” From the “Edit Graph” panel, open the “Format” panel and change the order of the lines to sort them by maturity (this process may take some time).

Suggested by Christian Zimmermann.

View on FRED, series used in this post: CD12NRNJ, CD1NRNJ, CD24NRNJ, CD36NRNJ, CD3NRNJ, CD48NRNJ, CD60NRNJ, CD6NRNJ

Who’s buying Treasuries?

Domestic vs. foreign ownernship of U.S. federal debt

As long as a government runs deficits, it has to find buyers for its bonds. In the years after the Great Recession, the Federal Reserve was a willing buyer of U.S. Treasury bonds. Since 2014, though, the Fed has put its buying spree on hold. So, somebody else must be taking up the slack. But who? The graph above addresses this question. Contrary to some reports, foreigners are not soaking up federal government debt. It seems to be domestic private investors, given that their holdings have continued increasing, while foreigners’ holdings have not. In terms of shares, as shown in the graph below, this becomes even clearer. It looks like the ownership of federal debt is actually shifting away from foreign investors toward domestic investors. (Take a look back at this FRED Blog post from May 2014.)

 

How these graphs were created: For the first, search for “federal debt held,” check the three series, and click on “Add to Graph.” For the second, start with the first: From the “Edit Graph” menu, open the panel for the line with the debt held by private investors, add to it the series with foreign debt holders, apply formula a-b, and restrict the dates to the past ten years. Finally, from the “Format Graph” tab, select graph type “Area” with stacking “Percent.”

Suggested by Christian Zimmermann.

View on FRED, series used in this post: FDHBFIN, FDHBFRBN, FDHBPIN


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