U.S. Budget Deficit Reaches $1.897 Trillion

By David Lawder

WASHINGTON (Reuters) – The U.S. budget deficit reached $1.897 trillion for the first 11 months of the 2024 fiscal year, as reported by the Treasury Department on Thursday. Annual interest costs on public debt exceeded $1 trillion for the first time.

The fiscal 2024 deficit through August increased 24% from a $1.525 trillion deficit in the same period last year. This rise is attributed to higher interest rates and a $319 billion reversal of costs in August 2023 for President Joe Biden's student loan forgiveness program, which was invalidated by the U.S. Supreme Court. Last year's reductions were not replicated this year.

The 11-month deficit closely aligns with the Congressional Budget Office's estimate of a $1.9 trillion gap for the entirety of fiscal 2024, with just one month remaining before the fiscal year ends on September 30. It is projected to become the largest deficit outside the COVID-19 era and considerably higher than the $1.695 trillion deficit reported for fiscal 2023.

Additional factors contributing to the fiscal 2024 deficit include increased costs for government-operated Social Security and Medicare programs, as well as defense expenditures.

In the first 11 months of fiscal 2024, receipts surged 11% to $4.391 trillion from $3.972 trillion in the same timeframe of fiscal 2023, while outlays rose to $6.288 trillion, up 14% from the previous year.

Treasury's year-to-date interest costs hit $1.049 trillion by August, reflecting a 30% increase from the same period last fiscal year. The weighted average interest in August reached 3.35%, up 43 basis points from the prior year, driven by higher interest payments on a debt exceeding $35 trillion.

For August alone, the deficit stood at $380 billion, contrasting with a surplus of $89 billion in August last year, which was affected by the student loan reduction. Receipts for the month totaled $307 billion, marking an 8% increase from August 2023, while outlays skyrocketed to $687 billion, representing a 254% rise against the student loan-augmented year-ago period.