Economists forecasted a $102.0 billion budget deficit for the month of October out of the US, but the actual budget deficit came in at a much lower than expected $91.6 billion and is far less than October’s 2012 $120.0 billion budget deficit. Despite the lower than expected deficit the US continues to operate the country under a monthly deficit which is an extremely bearish sign for the economy long-term.
Revenues came in at $198.9 billion, up $14.6 billion or 7.92% compared to October 2012, while spending totaled $290.5 billion, down $13.8 billion or 4.54% compared to October 2012. Equity markets rallied, but the US Dollar sold off across the board as traders weighed the Federal Reserve’s next move which many expect will be a reduction in the current stimulus which stands at $85 billion per month.
The US has not been able to reduce spending to appropriate levels and continues to operate under a monthly budget deficit which has helped to push the US debt level above $17 trillion for a debt-to-GDP ratio of above 100%. Spending fell by the biggest amount in the fiscal year which ended September 30th since the administration of President Eisenhower and the budget deficit totaled $680.3 billion which stood at a five year low.
Sequestration, across the board budget cuts in the federal system, combined with higher revenues from payroll taxes have only had a minor impact on the budget deficit as Democrats are blocking more spending cuts as they try to borrow more from foreign governments in order to support their social programs which have led to the fiscal demise of the US.
Unless the US engages into more drastic spending cuts in combination with tax decreases in order to spur more economic activity the budget deficit will continue to add to the total debt level which has been accelerating at all-time record levels since the current administration entered the White House over five years ago. Overall this data is bearish for the US Dollar and forex traders are reaction accordingly.