US Data: The budget deficit for the 2024 fiscal year is expected to exceed $1.8 trillion, making it the third highest federal deficit in history
The U.S. Department of the Treasury report shows that the budget deficit for the 2024 fiscal year reached $1.833 trillion, the third highest in history, mainly due to the federal debt interest exceeding $1 trillion for the first time and expenditure growth. The deficit increased by 8% compared to the 2023 fiscal year, accounting for 6.4% of GDP. Fiscal revenue reached a record high of $4.919 trillion, while expenditure was $6.752 trillion, with interest costs increasing by 29% to $1.133 trillion
WASHINGTON, Oct 18 (Reuters) - The U.S. Treasury Department said on Friday that the budget deficit for the 2024 fiscal year has increased to $1.833 trillion, the largest deficit outside of the COVID-19 period, due to the federal debt interest exceeding $1 trillion for the first time, as well as growth in Social Security retirement plans, healthcare, and military spending.
The deficit for the 2024 fiscal year as of September 30 increased by $138 billion, or 8%, from the $1.695 trillion in the 2023 fiscal year, making it the third-highest federal deficit in U.S. history, only behind the $3.132 trillion and $2.772 trillion in the 2020 and 2021 fiscal years respectively caused by COVID-19 relief programs.
The 2023 fiscal year deficit decreased due to a $330 billion reduction in related expenses after President Biden's student loan plan was rejected by the U.S. Supreme Court. Without this situation, the deficit would have exceeded $2 trillion.
The 2024 fiscal year budget deficit is equivalent to 6.4% of the Gross Domestic Product (GDP), higher than the previous year's 6.2%.
With growth in individual non-withheld tax payments and corporate tax revenue, the U.S. fiscal revenue for the 2024 fiscal year reached a record $4.919 trillion, an increase of $479 billion from the previous fiscal year, a growth rate of 11%. The expenses for the 2024 fiscal year reached $6.752 trillion, an increase of $617 billion, a growth rate of 10%.
Interest Costs
The largest driver of this fiscal year's deficit is the 29% increase in public debt interest costs, reaching $1.133 trillion, due to rising interest rates and increased debt financing needs, exceeding the costs of Medicare and defense spending.
A senior Treasury Department official stated that interest costs accounted for 3.93% of GDP, lower than the record of 4.69% set in 1991, but the highest proportion since reaching 4.01% in December 1998.
The weighted average interest rate on federal debt in September was 3.32%, up 35 basis points from the same period last year, but lower than August's 3.35%, marking the first monthly decline since January 2022.
Other drivers of expenditure growth this fiscal year include: a 7% increase in Social Security spending to $1.520 trillion; a 4% increase in Medicare spending to $1.050 trillion; and a 6% increase in military project spending to $826 billion.
The government reported a budget surplus of $64 billion in September, compared to a $171 billion deficit in September 2023, but this improvement was mainly due to calendar adjustments in benefit payments. Without these adjustments, a $16 billion deficit would have occurred in September 2024.
Government revenue in September reached a record $528 billion, a 13% year-on-year increase. Expenditure was $463 billion, a 27% year-on-year decrease, mainly due to calendar adjustments. (End)
Graphic-Interest on US federal debt topped $1 trillion in 2024
Interactive graphic-Interest on US federal debt topped $1 trillion in 2024 here Graphic-U.S. federal deficit grew in 2024
Interactive graphic-U.S. federal deficit grew in 2024 here