US starts 2027 fiscal year with record October budget deficit of US$404bil

The US government started the 2027 fiscal year with a US$404 billion budget deficit for October, a record for the month and US$120 billion, or 42%, higher than the year-earlier period, as receipts shrank and outlays grew sharply, the Treasury Department said on Thursday.

October receipts fell by US$35 billion, or 9%, to US$369 billion, due partly to lower net customs duty collections. Individual non-withheld taxes were US$29 billion, or 36%, lower than year-ago levels, which were swelled by tax filing deadlines delayed for Californians affected by the 2025 wildfires.

After calendar-related adjustments made because benefit payments for November were shifted into October for both fiscal years, the Treasury said the adjusted deficit would have been US$285 billion, an increase of US$94 billion, or 49%, from the year-ago period.

But the reported October outlays came to a record for that month of US$773 billion, up US$84 billion, or 12%, from year-ago levels. The outlay increases were driven in part by a US$14 billion, or 80%, increase in US Department of Agriculture spending due to farm relief payments and a US$28 billion, or 30%, increase in military spending, representing an October payment to military trust funds that was delayed by last year’s government shutdown, along with increases spread across operations, maintenance and procurement.

Gross interest on the federal debt also rose US$11 billion, or 11%, from the previous October to US$115 billion.