October Budget Deficit Surges 34% To $134 Billion, Worst In Five Years

One month after the Treasury reported that in fiscal 2019 the US budget deficit hit $984 billion, a 26% increase from a year earlier, and the largest annual deficit since 2012's $1.1 trillion, today the US Treasury released the latest monthly deficit data which revealed that in October, the first month of Fiscal 2020, the US deficit shortfall hit $134 billion, a $34 billion, or 34%, increase to the $100 billion deficit in October 2018, bigger than the average forecast of $130 billion.

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October's deficit was the biggest in five years, just shy of the $136.5 billion in October 2015, and sets the US on the path to surpassing a $1 trillion deficit for the first time in eight years.

In the first month of fiscal 2020, income of $246 billion dropped 2.8% from a year earlier, while spending of $380 billion jumped 7.6%. The biggest sources of income were individual income taxes ($126 billion), social insurance and retirement ($90 billion), while the biggest outlays were social security ($89 billion), national defense ($71 billion), medicare ($56 billion) and health ($51) billion, while the US Treasury spent $33 billion on interest on the Federal debt, roughly the same that it spent on veterans' benefits, education, and agriculture combined.

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The monthly deficit would have been greater had Trump not imposed tariffs on Chinese goods: in October, customs duties boosted US revenue by $7.8 billion, up from $5.6 billion a year ago, and represents tariffs U.S. companies paid on imports of Chinese merchandise.

In October, the cumulative 12-month deficit gap hit 4.7% of GDP, the largest since May 2013. The US has not had a full-year budget surplus since 2001.

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So far this year, the CBO's forecast is spot-on: the budget office estimated the October deficit would be $133 billion, and it sees the total federal deficit topping $1 trillion in the current and 2021 fiscal years, about 5 % of GDP.

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