Net government saving, the difference between current receipts and current expenditures in the federal government and state and local governments, was -$1,194.1 billion in the third quarter of 2018, increasing $42.0 billion from -$1236.1 billion in the second quarter of 2018 (charts 1 and 2 and table 1).

"Net lending or net borrowing (-)" is an alternative measure of the government fiscal position. Net borrowing is the financing requirement of the government sector, and it is derived as net government saving plus the consumption of fixed capital and net capital transfers received less gross investment and net purchases of nonproduced assets.

Net borrowing was $1,327.3 billion in the third quarter, decreasing $18.6 billion from $1,345.9 billion in the second quarter (charts 3 and 4 and table 1).

Federal Government

Net federal government saving was -$967.3 billion in the third quarter, increasing $26.4 billion from -$993.7 billion in the second quarter (table 2). In the third quarter, both current receipts and current expenditures accelerated.

Federal government net borrowing was $1,044.2 billion in the third quarter, decreasing $1.3 billion from $1,045.5 billion in the second quarter.

* Personal current taxes (line 3) accelerated in the third quarter, reflecting the pattern of wages.

* Taxes on production and imports (line 4) accelerated in the third quarter, reflecting an acceleration in customs duties. New tariffs were introduced on steel, aluminum, and other products in the first and second quarters.

* Taxes on corporate income (line 5) decelerated in the third quarter, reflecting a deceleration in corporate profits.

* Contributions for government social insurance (line 7) accelerated in the third quarter, reflecting the pattern of wages.

* Income receipts on assets (line 8) turned up in the third quarter, reflecting an acceleration in dividends from Fannie Mae and Freddie Mac and a smaller decrease in remittances paid by the regional Federal Reserve Banks.

* Current transfer receipts (line 9) accelerated in the third quarter, reflecting a $2.1 billion ($8.4 billion at an annual rate) settlement with Wells Fargo and a $4.9 billion ($19.6 billion at an annual rate) settlement with the Royal Bank of Scotland.

* Government social benefits to persons (line 17) accelerated in the third quarter, reflecting an acceleration in Medicare benefits.

* Grants-in-aid to state and local governments (line 20) turned up, reflecting an acceleration in Medicaid grants and an upturn in other health grants.

* Other current transfer payments to the rest of the world (line 21) turned down in the third quarter; second-quarter transfers were boosted by economic support payments to Egypt and Israel.

* Interest payments (line 22) accelerated in the third quarter, reflecting an upturn in the interest on Treasury Inflation Protected Securities.

* Capital transfer payments (line 33) turned up, reflecting the payment of $5.0 billion ($20.0 billion at an annual rate) in disaster-related insurance benefits from the National Flood Insurance Program for Hurricane Florence.

Source Data and Other Information About Federal Government Estimates

Estimates of federal government current receipts, current expenditures, and net federal government saving are based on data from the federal budget, from the Monthly Treasury Statement and other reports from the Department of the Treasury, and from other federal government agencies. Total receipts, total expenditures, and net lending or net borrowing, which are alternative measures of the federal fiscal position, are based on these same sources.

Quarterly and annual estimates are available monthly in NIPA table 3.2. Detailed annual estimates of these transactions by component are available in NIPA tables 3.4-3.8, 3.12, and 3.13, and quarterly estimates for selected series are available in NIPA underlying detail tables.

Each year, BEA translates the information in the federal budget into a NIPA framework. (1) For a historical time series of reconciliations of the NIPA estimates with the federal budget, see NIPA table 3.18b.

All the estimates are available in interactive tables on BEA's website.

(1). See Mark S. Ludwick and Brendan Brankin, "NIPA Translation of the Fiscal Year 2019 Federal Budget," Survey of Current Business 98 (March 2018).

State and Local Government

Net state and local government saving was -$226.8 billion in the third quarter, increasing $15.6 billion from -$242.4 billion in the second quarter. In the third quarter, current receipts accelerated, and current expenditures decelerated (table 3).

State and local government net borrowing was $283.1 billion, decreasing $17.3 billion from $300.4 billion in the second quarter.

* Personal current taxes (line 3) turned up in the third quarter, reflecting an upturn in personal income taxes.

* Taxes on corporate income (line 5) decelerated in the third quarter, reflecting a deceleration in corporate profits.

* Federal grants-in-aid (line 9) turned up in the third quarter, reflecting an acceleration in Medicaid grants and an upturn in other health grants.

* Government social benefits (line 14) decelerated in the third quarter, reflecting a deceleration in Medicaid benefits.

* Capital transfer receipts (line 22) turned up in the third quarter, reflecting $0.8 billion ($3.2 billion at an annual rate) in disaster-related insurance benefits for Hurricane Florence.

* Gross government investment (line 25) decelerated in the third quarter, reflecting a deceleration in structures investment.

Source Data and Other Information About Estimates of State and Local Government

Receipts and Expenditures

The estimates of state and local government current receipts and expenditures and total receipts and expenditures are mainly based on compilations of data for state and local government finances. The Census Bureau produces the primary source data: the census of governments that is conducted in years that end in a 2 or a 7 and the Government Finances series of surveys for the other years. In addition, other sources of Census Bureau data are from the Quarterly Summary of State and Local Government Tax Revenue and the monthly Value of Construction Put in Place. Data sources from the Bureau of Labor Statistics include the Quarterly Census of Employment and Wages and the Employment Cost Index.

Quarterly and annual estimates are available monthly in NIPA table 3.3. Detailed annual estimates of state and local government transactions by component are available in NIPA tables 3.4-3.8, 3.12, and 3.13, and quarterly estimates for selected series are available in NIPA underlying detail tables. For a historical time series of reconciliations of the NIPA estimates with the Census Bureau data from Government Finances, see NIPA table 3.19.

Annual estimates of receipts and expenditures of state governments and of local governments are available in NIPA table 3.20 (state government receipts and expenditures) and in NIPA table 3.21 (local government receipts and expenditures). (1)

All the estimates are available in interactive tables on BEA's website.

(1). Bruce E. Baker, "Receipts and Expenditures of State Governments and of Local Governments," Survey of Current Business 85 (October 2005): 5-10.

Prepared by Kelly Ramey

Table 1. Net Government Saving and Net Lending or Net Borrowing
(Billions of dollars, seasonally adjusted at annual rates)

 Line                      Level        Change from preceding quarter
                           2018        2017       2018     2018    2018
                           III          IV         I        II      III

 1     Current receipts     5,574.1    -22.6      -88.3    47.4   113.6
 2     Current              6,768.2    110.6       63.5    83.2    71.6
       expenditures
 3     Net government      -1,194.1   -133.2     -151.7   -35.9    42.0
       saving
 4       Federal             -967.3   -143.1     -166.3   -23.8    26.4
 5       State and local     -226.8      9.8       14.5   -12.0    15.6
 6     Net lending or      -1,327.3    920.6   -1,153.4   -46.2    18.6
       net borrowing (-)
 7       Federal           -1,044.2    925.8   -1,164.0   -25.7     1.3
 8       State and local     -283.1     -5.2       10.6   -20.5    17.3

Table 2. Federal Government Current Receipts and Expenditures
(Billions of dollars, seasonally adjusted at annual rates)

Line                            Level     Change from preceding quarter
                                2018      2017      2018    2018    2018
                                 III       IV         I      II      III

 1         Current receipts    3,541.8    -56.7    -105.3   27.9    85.6
 2     Current tax receipts    1,970.4    -21.7    -149.2   27.8    33.8
 3       Personal current      1,622.8      7.4     -49.4   15.3    23.6
         taxes
 4       Taxes on production     159.0      1.7      15.6    2.5     7.0
         and imports
 5       Taxes on corporate      161.7    -31.6    -115.4    9.1     3.6
         income
 6       Taxes from the rest      27.0      0.8      -0.1    1.0    -0.3
         of the world
 7     Contributions for       1,348.6     11.0      26.0    8.7    12.4
       government social
       insurance
 8     Income receipts           126.7    -20.0      13.3   -9.6    13.9
       on assets
 9     Current transfer          105.2    -23.6       7.5    2.9    25.2
       receipts
10     Current surplus of         -9.1     -2.4      -3.0   -1.8     0.2
       government
       enterprises
11         Current             4,509.1     86.3      61.0   51.7    59.2
           expenditures
12     Consumption             1,041.3     13.2      14.8   15.2    13.4
       expenditures
13       National defense        628.6      6.2       8.1   11.8    10.2
14       Nondefense              412.7      7.1       6.5    3.5     3.2
15     Current transfer        2,852.9     17.9      45.5   28.7    24.1
       payments
16       Government social     2,211.8     14.5      36.8   16.6    23.0
         benefits
17         To persons          2,188.9     13.7      36.5   16.6    23.0
18         To the rest            23.0      0.9       0.3    0.0     0.1
           of the world
19       Other current           641.0      3.3       8.8   12.1     1.0
         transfer payments
20         Grants-in-aid to      587.0     -6.1      18.0   -2.6    10.4
           state and local
           governments
21         To the rest            54.0      9.3      -9.2   14.7    -9.4
           of the world
22     Interest payments         555.6     54.1       4.4    9.0    21.1
23     Subsidies                  59.4      1.1      -3.6   -1.3     0.7
24     Net federal              -967.3   -143.1    -166.3  -23.8    26.4
       government saving
25     Social insurance         -365.6     -2.5      -7.6  -10.2   -11.2
       funds
26     Other                    -601.7   -140.5    -158.6  -13.7    37.6
       Addenda:
27       Total receipts        3,564.7    944.5  -1,105.0   26.1    85.5
28         Current receipts    3,541.8    -56.7    -105.3   27.9    85.6
29         Capital transfer       22.9  1,001.3    -999.7   -1.8    -0.1
           receipts
30       Total expenditures    4,608.9     18.7      59.0   51.8    84.2
31         Current             4,509.1     86.3      61.0   51.7    59.2
           expenditures
32         Gross government      288.2      3.5      -0.4    2.9     3.1
           investment
33         Capital transfer       96.5    -76.2      -0.1   -0.6    24.2
           payments
34         Net purchases          -0.6      6.7       0.1   -0.2     0.1
           of nonproduced
           assets
35         Less: Consumption     284.3      1.5       1.6    2.1     2.3
           of fixed capital
36     Net lending or         -1,044.2    925.8  -1,164.0  -25.7     1.3
       net borrowing (-)

Table 3. State and Local Government Current Receipts and Expenditures
(Billions of dollars, seasonally adjusted at annual rates)

Line                             Level    Change from preceding quarter
                                  2018     2017   2018    2018    2018
                                   III      IV     I       II      III

 1         Current receipts     2,619.3    28.0   35.0    16.8   38.5
 2     Current tax receipts     1,786.6    31.8   14.3    17.0   25.5
 3       Personal current         439.7    15.0    8.5   -10.0    3.6
         taxes
 4       Taxes on production    1,276.6    14.6   12.3    13.0   15.2
         and imports
 5       Taxes on corporate        70.3     2.1   -6.3    13.9    6.7
         income
 6     Contributions for           21.9     0.4    0.3     0.3    0.3
       government social
       insurance
 7     Income receipts             87.7     0.6   -0.2     0.6    0.5
       on assets
 8     Current transfer           726.9    -4.3   20.1    -0.7   12.4
       receipts
 9       Federal                  587.0    -6.1   18.0    -2.6   10.4
         grants-in-aid
10       Other                    139.9     1.7    2.2     2.0    1.9
11     Current surplus of          -3.9    -0.4    0.3    -0.3   -0.3
       government
       enterprises
12         Current              2,846.1    18.2   20.5    28.9   22.8
           expenditures
13     Consumption              1,822.6    20.5   16.4    18.7   19.5
       expenditures
14     Government social          744.9    -2.6    7.8    13.1    5.3
       benefits
15     Interest payments          278.0     0.4   -3.7    -3.0   -2.0
16     Subsidies                    0.6     0.0    0.0     0.0    0.0
17     Net state and             -226.8     9.8   14.5   -12.0   15.6
       local government
       saving
18     Social insurance funds       4.5     0.1    0.1     0.1    0.1
19     Other                     -231.3     9.7   14.4   -12.2   15.6
       Addenda:
20       Total receipts         2,696.1    15.5   35.2    16.6   45.9
21         Current receipts     2,619.3    28.0   35.0    16.8   38.5
22         Capital transfer        76.8   -12.5    0.1    -0.2    7.4
           receipts
23       Total expenditures     2,979.2    20.7   24.7    37.1   28.5
24         Current              2,846.1    18.2   20.5    28.9   22.8
           expenditures
25         Gross government       398.6     9.4    7.1    12.9    8.1
           investment
26         Capital transfer     --        --      --     --      --
           payments
27         Net purchases of        14.6     0.2    0.2     0.3    0.3
           nonproduced assets
28         Less: Consumption      280.1     2.1    3.3     4.8    2.8
           of fixed capital
29     Net lending or            -283.1    -5.2   10.6   -20.5   17.3
       net borrowing (-)