Inflation Boosting Tax Receipts

(1) The federal budget deficit, on a 12-month-moving-average basis, has narrowed significantly from its record high of $4.1 trillion through March 2021 to just $1.2 trillion through April of this year. Outlays, also on a 12-month basis, have dropped 20% since they peaked at a record $7.6 trillion during March 2021 through April of this year.

(2) Federal government receipts (based on 12-month sums) have been soaring to record highs since April 2021, led by an almost vertical ascent in individual income-tax receipts. Total federal tax receipts are up 31.5% y/y through April, led by a 53.8% jump in individual income-tax receipts.