The federal budget deficit reached a staggering $1.6 trillion in the first 10 months of fiscal year 2023, more than double what it was during the same period last year, according to the Treasury Department’s latest statement. The deficit for the month of July alone stood at $221 billion.
In the month of July, government receipts saw a 3% increase, reaching $276 billion. At the same time, government spending also experienced a 3% climb, reaching $497 billion.
For the fiscal year so far, total receipts have fallen by 10%, amounting to approximately $3.7 trillion. According to a separate report by the Congressional Budget Office (CBO), this decline in receipts is attributed to lower-than-expected collections of individual and corporate income taxes.
On the other hand, spending has risen by 10% to $5.3 trillion, with notable expenditures allocated to Social Security, Medicare, and Medicaid.
It’s important to note that the government’s fiscal year runs from October through September.
The Big Picture
These latest deficit figures were announced shortly after Fitch Ratings downgraded U.S. debt due to “expected fiscal deterioration” and other factors. The Biden administration strongly criticized this action, with Treasury Secretary Janet Yellen emphasizing the fundamental strength of the U.S. economy.
Although consumer prices showed relatively subdued inflationary pressures in the latest report, U.S. stocks experienced some gains on Thursday. However, they were slightly below their session highs. Initially, there was a brief decline in Treasury yields following the release of the CPI data, but they eventually stabilized.