U.S. budget deficit weighs in at $129B

The U.S. Treasury reported a $129 billion budget deficit in December, which is 52%, or $44 billion, higher than a year ago.

The Treasury said outlays, or federal government spending, increased while receipts fell from December 2022 levels, which reflected pandemic-deferred tax payments, Reuters reported Thursday.

“In looking at the fiscal year to date, the first three months of the year, both individual and corporate income taxes are up, interest on the [public] debt is definitely up, the increase in total outlays is about twice the size of total receipts, so that comes from the increasing deficit, and a big component of that was interest on the debt, which was much higher than it was last year at this time,” said Michael Pakko, chief economist and state economic forecaster for the Arkansas Economic Development Institute.

Outlays from November to December decreased by 5% to $559 billion, but were up by 3% from a year prior; outlays were record-high for the month of December.

The Treasury said outlays rose at least partly because of higher Social Security payouts and interest on public debt, Reuters reported.

Revenues from November to December increased by 56% to $429 billion and fell by nearly 6% from a year earlier.

For the first three months of the 2024 fiscal year, which started on Oct. 1, the federal deficit was $510 billion, which was 21% higher than a year earlier.

Year-to-date outlays of $1.6 trillion and receipts of $1.108 trillion reported in December both surpassed the $1 trillion mark; Reuters reported these items were record-high.

“One of the things to keep in mind during this inflationary environment, we’re going to see increases in both the incomes that generate the taxes and expenditures, or anything that the government is spending on, so I don’t think it’s surprising to see record numbers as inflation basically deflates the value of those dollars, compared to a year or more ago,” Pakko said.

“But it’s certainly true that we’re on track to have another deficit this year that exceeds $1.7 trillion.”

Public debt interest costs for December rose 11% from a year earlier to $119 billion because of greater debt levels and a higher weight average interest rate of 3.11%, which was three-quarters of a point higher than the prior year, Reuters reported.

“As the magnitude of the debt increases, that’s going to increase interest payments, but also the interest that is on newly issued Treasury securities is going to be higher than it was a year ago, so both factors kind of play into the increase of the cost of interest on debt,” Pakko said.

The national debt as of January 9 was $34 billion.