U.S. Budget Deficit Reaches $1.897 Trillion in Fiscal 2024

By David Lawder

WASHINGTON (Reuters) – The U.S. budget deficit has reached $1.897 trillion for the first 11 months of the fiscal year 2024, according to the Treasury Department. This marks the first time annual interest costs on public debt have exceeded $1 trillion.

Key Statistics

• The fiscal 2024 deficit through August increased by 24% compared to a $1.525 trillion deficit in the same period last year.
• Contributing factors include higher interest rates and a $319 billion reversal of costs linked to President Joe Biden’s student loan forgiveness program, which was overturned by the U.S. Supreme Court.
• The 11-month deficit aligns with the Congressional Budget Office’s estimate of a $1.9 trillion deficit for the entire fiscal year.
• This places the deficit on track to be the largest outside the COVID-19 pandemic period, significantly above the $1.695 trillion deficit from fiscal 2023.

Contributing Factors

• Increased costs in government-run Social Security, Medicare, and defense programs have also contributed to the rising deficit.
• Total receipts for the first 11 months of fiscal 2024 rose by 11% to $4.391 trillion compared to $3.972 trillion in the same period of fiscal 2023.
• Outlays for this period totaled $6.288 trillion, reflecting a 14% increase from $5.496 trillion in the previous year, in part due to the reversal of student loan benefits.

Interest Costs

• Year-to-date interest costs up to August hit $1.049 trillion, a 30% increase from the same period last year. The weighted average interest rate was 3.35%, up 43 basis points from the previous year.
• The increase in interest costs is associated with a rising debt total, now over $35 trillion.

August Review

• For August, the Treasury reported a deficit of $380 billion, a stark contrast to a surplus of $89 billion in August of the previous year due to the student loan program’s reversal.
• Receipts in August reached $307 billion, an 8% increase from August 2023, while outlays soared to $687 billion, marking a 254% increase caused by the prior year’s loan reduction.