U.S. Treasury Department in Washington, D.C., June 25, 2024.
The U.S. budget deficit rose to $1.833 trillion in fiscal 2024, the highest amount outside the COVID-19 period. This marked an 8% increase from the previous year’s deficit of $1.695 trillion.
This deficit was the third-largest in U.S. history, after the pandemic deficits of $3.132 trillion in fiscal 2020 and $2.772 trillion in fiscal 2021. Without adjustments from a Supreme Court decision on Biden’s student loan program, the deficit would have exceeded $2 trillion.
The federal government’s revenue increased to a record $4.919 trillion, an 11% rise due to higher individual and corporate tax collections. Meanwhile, spending grew by 10%, totaling $6.752 trillion.
Interest Costs
The main factor for the deficit was a 29% jump in interest costs for Treasury debt, reaching $1.133 trillion, driven by higher interest rates and increased debt. This cost surpassed Medicare and defense spending.
Interest costs as a portion of GDP hit 3.93%, below the 1991 peak but the highest since late 1998. The average interest rate on federal debt was 3.32% in September, showing a small decline from the previous month.
Other increased spending included a 7% rise in Social Security costs to $1.520 trillion, a 4% increase in Medicare to $1.050 trillion, and a 6% rise in military spending to $826 billion.
In September, the government reported a surplus of $64 billion, compared to a $171 billion deficit a year earlier; however, this improvement was influenced by payment timing adjustments. Without these adjustments, the deficit would have been $16 billion.
September’s revenues reached a record $528 billion, a 13% increase from the prior year, while outlays totaled $463 billion, down 27% largely due to timing adjustments.
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