US Deficit Hits $404B as Spending Surges and Revenues Fall

By Staff, Agencies

The US government recorded a record budget deficit of $404 billion in October 2026, the first month of fiscal year 2027, marking a 42% increase, or $120 billion, compared with the same month last year, according to the Treasury Department. 

The shortfall came as government revenues declined and spending surged.

US revenues fell by $35 billion, or 9%, to $369 billion. Net customs revenue dropped 39% to $19.2 billion, down from $31.3 billion a year earlier, while individual income tax receipts also declined. 

Meanwhile, government expenditure reached a record $773 billion, rising 12% year-on-year.

Military spending increased by $28 billion, or 30%, while Department of Agriculture expenditure rose by $14 billion. Interest payments on federal debt also climbed by $11 billion to $115 billion. 

The record monthly deficit follows an approximately $2 trillion shortfall in fiscal year 2026, equivalent to 6.2% of US GDP, exceeding the Treasury Secretary's 3% target.

Meanwhile, US inflation accelerated in September, with consumer prices rising 0.6% month-on-month and 3.7% annually. 

Gasoline prices surged 9.1%, accounting for more than half of the monthly increase, amid rising energy costs linked to the US war on Iran.

Core inflation, excluding food and energy, also exceeded expectations, rising 0.3% monthly and reaching 2.6% annually. 

Shelter, used vehicles, and airfares recorded further increases, adding pressure on the Federal Reserve as concerns grow over a possible interest-rate hike.