US: Federal revenue's slowdown is not "necessarily" a concern - Wells Fargo

Analysts from Wells Fargo think that a slowdown in the US federal tax collections is not 'necessarily' a cause for concern, amid deceleration registered from last year.

Key Quotes:

"Through the first nine months of the federal fiscal year, the federal budget deficit was $400.8 billion, $84.5 billion more than the shortfall at this time last year. "

"Total revenues are up just 0.9 percent relative to this time last year, and individual income tax receipts are up a meager 0.4 percent, both below what the Congressional Budget Office projected earlier this year."

"On the outlay side, even with the modest boost to discretionary spending from the Bipartisan Budget Act of 2015, mandatory spending continues to outpace discretionary. Spending on national defense, which accounts for about half of discretionary spending, is slightly down fiscal year to date, with both operation & maintenance and procurement declining."

"We look for real government purchases to decline a modest 0.3 percent in Q2, but for federal and state & local to switch roles from the first quarter"

"Looking ahead to the second half of the year, we look for moderate growth of just under 2 percent for real government purchases, an improvement relative to recent years but modest compared to previous economic cycles."