U.S. Federal Budget Posts Largest Deficit Since 2020 in October

Forex - The U.S. budget deficit increased as the new fiscal year began, casting a shadow over the budget outlook as Washington prepares for a second Trump presidency. The Treasury Department reported that the federal budget deficit in October was approximately $257 billion, an increase of 287% or $191 billion compared to the previous year. This marked the highest deficit recorded in the first month of a fiscal year since the pandemic began in 2020. Economists had predicted that the deficit for October, the first month of the 2025 fiscal year, would be $72.7 billion. The Treasury Department indicated that the October 2023 deficit should be considered higher than previously reported. When accounting for postponed tax payments and changes in spending schedules due to natural disasters, particularly in California, the deficit would have been $211 billion instead of the previously assumed $67 billion. This still represents an approximate year-over-year increase of $47 billion. The department noted that totals and differences may not align due to rounding. The U.S. recorded a deficit of $1.833 trillion in the fiscal year that ended in September, marking the third highest deficit on record. Part of the deficit in October stemmed from national defense spending, which was about $15 billion higher than the previous year. Social Security expenditures were approximately $8 billion more. Interest paid on Treasury bills decreased by about $7 billion due to falling payments on inflation-protected securities in recent years as inflation has declined.