May 23, 2023 - Economy

How much money the U.S. has left ahead of the X-date

Data: FactSet, Federal Reserve; Chart: Axios Visuals
Data: FactSet, Federal Reserve; Chart: Axios Visuals

Time is money. But in the case of the debt ceiling, money is also time.

Driving the news: Uncle Sam's checking account — something known as the Treasury General Account, held at the Federal Reserve Bank of New York — is dwindling fast.

  • The last weekly update on the account showed the balance falling to less than $61 billion, its lowest level since the recent round of wrangling over raising the debt ceiling began.

Why it matters: The so-called X-date is when this account — which fluctuates depending on tax collections and government payments — no longer has enough money to meet the country's financial obligations, potentially triggering a technical default.

The latest: President Biden and House Speaker Kevin McCarthy held what they described as productive talks at the White House Monday night, but no deal was reached.

Context: A month ago, many on Wall Street closely tracking the debt ceiling issue thought the true X-date would likely be sometime in July or even early August.

  • Yes, but: April yielded disappointing tax revenues — likely due to the ugly year on Wall Street in 2022, which cut capital gains receipts — leaving the Treasury less wiggle room than expected.

What they're saying: Many analysts now think the moment of truth may actually come sometime in early June, which the Treasury has publicly said for months.

  • "By June 8-9 cash is likely to drop under $30 billion," Goldman Sachs analysts wrote, adding, "At that point, we believe there are even odds that the Treasury exhausts its funds entirely."
  • JPMorgan analysts wrote that "up until May 4th, [our] view was that the x-date would actually be mid/early August but, after weak tax receipt data from April likely driven by lower capital gains taxes collected, the date was revised to June 9 and later June 7."

The bottom line: Time keeps on slipping, slipping, slipping...

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