Economy Watch: Service Sector Revenues Mixed in Q1; Federal Budget Deficit Continues Falling
- Jun 12, 2014
The Census Bureau reported on Wednesday that U.S. service sector revenues increased for certain industries in the first quarter of 2014 compared with the previous quarter, such as information services, utilities, and finance and insurance. Other industries, including real estate, didn’t fare as well, and experienced declines in revenue quarter over quarter.
The estimate of U.S. real estate and rental and leasing revenue for the first quarter of 2014 — not adjusted for seasonal variation or price changes — was $118.9 billion, a decrease of 3.4 percent from the fourth quarter 2013. But revenues were up 8.4 percent compared with the first quarter of 2013.
Transportation and warehousing also suffered a down quarter. The bureau’s estimate of U.S. transportation and warehousing revenue for the first quarter of 2014 was $200.7 billion, a decrease of 2.8 percent from the fourth quarter. But like in real estate, there was an annual gain: up 5.8 percent compared with the first quarter 2013.
Federal Budget Deficit Continues Falling
The federal budget deficit continued to decline in May, according to the U.S. Department of the Treasury on Wednesday in its Monthly Treasury Statement. The government ran a $130 billion deficit in May, down from $138 billion during the same month in 2013. For FY 2014 (beginning Oct. 1, 2013) so far, the deficit is $436 billion, down from $626 billion during the same period a year ago.
The declines are in line with predictions by the Congressional Budget Office, which currently (as of April) foresees a deficit in FY 2014 of 2.8 percent of GDP. As recently as 2009, the deficit was about 10 percent of GDP, making the recent drop about as precipitous as the one following WWII, when military spending contracted quickly.
The CBO isn’t predicting a future period of surplus (as occurred famously in the late 1990s). After dropping to around 2 percent of GDP in fiscal 2015, the CBO is predicting a slow increase during the rest of the 2010s, and rates of around 4 percent of GDP in the early 2020s. That’s nearly forever in political terms, however, and so changes in fiscal policy might well affect the deficit one way or the other in the coming decade.
Wall Street dropped off its record highs on Wednesday, but not too far, with the Dow Jones Industrial Average losing 102.04 points, or 0.6 percent. The S&P 500 was off 0.3 percent and the Nasdaq dropped 0.1 percent.