The U.S. budget deficit hit $1.8 trillion in the last fiscal year, increasing by $138 billion due to high government spending and rising interest payments on the national debt. This figure is the third-largest deficit in U.S. history, following the record deficits of 2020 and 2021 during the pandemic. Major contributors to the increase in spending include a 30% rise in interest payments due to higher interest rates.
On a positive note, the government saw an increase in revenue from individual and corporate taxes, which helped lessen the impact of the deficit. Treasury Secretary Janet Yellen stated that despite fiscal challenges, the economy is resilient, and the final deficit for 2024 was about $76 billion lower than projected. However, the deficit-to-GDP ratio slightly rose to 6.4% from 6.2% in 2023, indicating ongoing fiscal pressures as the country approaches the 2024 presidential election.
