A new record outside the epidemic period! The US government's deficit for the 2024 fiscal year exceeded $1.8 trillion, with debt interest expenses exceeding a trillion

Official data shows that in the just-ended fiscal year, the US government's financial situation was extremely severe, with the annual deficit in the 2024 fiscal year reaching the highest level in over 200 years of US history, excluding the period of the COVID-19 pandemic. This was mainly due to the Federal Reserve raising interest rates and maintaining high rates, leading to a heavier burden on government debt interest costs, as well as increased expenses for social security programs and military spending.

On Friday, October 18th, Eastern Time, the US Department of the Treasury announced that for the 2024 fiscal year ending on September 30, the federal government's fiscal deficit reached $1.833 trillion, the third highest on record, only surpassed by the $3.132 trillion in the 2020 fiscal year during the COVID-19 pandemic and $2.772 trillion in the 2021 fiscal year.

2024's budget deficit expanded by over 8.1% to nearly $1.7 trillion compared to the 2023 fiscal year, and for the second consecutive year, the deficit-to-GDP ratio exceeded 6%, standing at 6.4%, slightly higher than the 6.2% ratio in the 2023 fiscal year.

Full-year public debt interest expenses increased by 29% to $1.1 trillion, the highest as a share of GDP since 1998

US Treasury officials stated that the fiscal year's budget deficit disclosed this time was $144 billion lower than the benchmark expected deficit of $1.91 trillion announced in March this year. This was mainly due to the Biden administration canceling the student loan forgiveness program.

Despite a decrease compared to previous expectations, the actual government deficit as a share of GDP still reached unusually high levels not seen since periods outside of economic recessions and world wars. The increasing debt interest payments have been a major driver of the expanding deficit.

Huaerjie News previously mentioned that data released by the Treasury in September showed that in the first 11 months of the 2024 fiscal year, the US government's interest costs surpassed $1 trillion for the first time in history, reaching $1.049 trillion, a sharp 30% increase year-on-year.

The Treasury has now announced that for the entire 2024 fiscal year, the US government's interest payments on public debt reached $1.1 trillion, an increase of $254 billion compared to the previous fiscal year, representing a 29% increase. Calculated this way, interest payments on debt account for approximately 3.93% of GDP, reaching a new high since 1998.

However, the Federal Reserve began cutting interest rates in September, initiating a period of easing. This is expected to alleviate the pressure on the US government's interest payments in the future As of the end of September, the weighted average interest rate on outstanding U.S. federal debt was 3.32%, the highest level in 15 years. According to Reuters citing a senior official from the U.S. Department of the Treasury, this debt cost's weighted average interest rate began to decline in September, marking the first decrease since January 2022.

Social Security Spending Increases by Over One Trillion Dollars in a Year, with Half of Government Revenue Growth Coming from Personal Income Taxes

In the 2024 fiscal year, two other major expenditure increases come from the federal government's Social Security program for elderly and disabled workers, as well as defense spending.

In the 2024 fiscal year, the total expenditure of the U.S. federal government reached $6.8 trillion, an increase of $617 billion compared to the 2023 fiscal year, representing a growth rate of 10.1%. The ratio of expenditure to GDP rose from 22.5% to 23.4%. Among them, spending on the Social Security program increased by $103 billion, a 7% increase, defense spending increased by $50 billion, a 6% year-on-year increase, and spending on the federal government's largest health insurance program, Medicare, increased by $28 billion, a 3% increase.

In terms of year-on-year expenditure increases, the Social Security program saw the largest increase in the 2024 fiscal year, while in terms of percentage increase, the growth rate of government debt interest costs far exceeded that of Social Security.

On the revenue side, there was also double-digit growth in the 2024 fiscal year, with total revenue reaching a record high of $4.919 trillion for the fiscal year, accounting for 17.1% of GDP, an increase of $479 billion compared to the previous year, representing a growth rate of 10.8%.

The Department of the Treasury stated that the revenue growth mainly came from a $250 billion increase in personal income tax revenue and a $110 billion increase in corporate income tax. Calculated this way, the increase in personal income tax revenue accounted for 52% of the total revenue increase for the year, while corporate income tax accounted for approximately 23%.

Presidential Candidates Face Deficit Challenges

The media generally believes that the budget deficit issue will pose a challenge to the U.S. presidential candidates facing the "decisive battle" in the upcoming November election. Previous analyses have indicated that both "Harris Economics" and "Trump Economics" share a common point: deficits. Both Harris and Trump have expressed dislike for inflation, but their proposed economic policies may lead to rising prices in the U.S. and an expansion of the fiscal deficit.

The fiscal think tank, the Committee for a Responsible Federal Budget, estimated earlier this month that Harris's economic plan would increase government debt by $3.5 trillion over ten years, while Trump's economic plan would skyrocket debt by $7.5 trillion