On March 23rd, NIA predicted that the trailing twelve month U.S. budget deficit would reach a new all-time nominal high after the month of April 2020. At the time, the trailing twelve month deficit at the end of February 2020 was $1.065 trillion or 4.88% of GDP. NIA explained that the previous record high nominal deficit reached in February 2010 was $1.478 trillion. As a percentage of GDP, the previous record high deficit reached in December 2009 was 10.09%. NIA predicted that the trailing twelve month deficit would reach a new all-time high on a nominal basis after the month of April 2020, followed by a new all-time high as a percentage of GDP this summer.
NIA was right... the trailing twelve month U.S. budget deficit reached a new all-time nominal high at the end of April 2020 of $1.935 trillion.
During the month of April 2020, the U.S. experienced a record breaking 161.09% increase in outlays to $979.714 billion (vs. $375.24 billion in April 2019). At the same time, the U.S. experienced a record breaking 54.84% decline in receipts to $241.863 billion (vs. $535.545 billion in April 2019). This resulted in a single month deficit of $737.851 billion vs. a single month surplus of $160.305 billion one year ago.
Officially, U.S. nominal GDP declined by $191.184 billion during 1Q 2020 from 4Q 2019, for the second largest quarter-over-quarter decline in history. Only 4Q 2008 had a larger nominal GDP decline of $275.644 billion over 3Q 2008.
The quarterly GDP data reported by the U.S. government is the average U.S. GDP over a three month period. We were able to break their data down into monthly GDP numbers to get a better idea of how much nominal GDP declined during the month of March 2020 from the month of February 2020.
NIA has calculated that nominal U.S. GDP during the month of March 2020 officially declined by $1.104 trillion from the month of February 2020. This was by far the largest monthly decline in nominal GDP in U.S. history. For comparison, the largest monthly decline during the 2008/2009 financial crisis was December 2008 when nominal GDP declined by $253.53 billion. The largest monthly decline during the 2001 recession was September 2001 when nominal GDP declined by $180.01 billion.
NIA is estimating that nominal U.S. GDP declined another $1.049 trillion during the month of April 2020 to $19.797 trillion. Based on our estimate of April 2020 GDP, the trailing twelve month U.S. budget deficit is now equal to 9.77% of GDP. We remain confident that the deficit as a percentage of GDP will surpass the December 2009 record high of 10.09% this summer.