US budget deficit climbs to highest level since March 2021

The US federal budget deficit surged to $432 billion in July, its highest monthly level since March 2021, driven by accelerating government spending and declining revenues, Treasury Department data showed Wednesday.

The shortfall widened 48% from $291 billion in July 2025.

Federal expenditures jumped 22% year-on-year to a record $766 billion, while revenues fell 1% to $334 billion.

The headline figures were partly inflated by calendar shifts that moved about $99 billion in benefit payments scheduled for August into July. Adjusted for those timing differences, the deficit was $333 billion, up 18% from a year earlier.

Medicare spending climbed 66% to $192 billion, although the increase narrowed to 9% after calendar adjustments.

Interest payments on public debt jumped 28% year-on-year to $118 billion in July, remaining one of the main drivers of federal spending growth.

Customs refunds rose sharply to $33 billion from $1 billion a year earlier, exceeding the $25 billion collected in gross customs duties during the month.

For the first 10 months of fiscal 2026, which began last October, the federal deficit reached nearly $1.8 trillion, up 10% from $1.63 trillion in the same period a year earlier. After calendar adjustments, the cumulative shortfall widened 5%.

The 10-month deficit has already surpassed the approximately $1.78 trillion gap seen in the whole of fiscal 2025, with two months remaining in the current fiscal year.

Federal spending rose 5% to $6.28 trillion in the October-July period, while receipts climbed 3% to $4.49 trillion.

Interest payments on public debt totaled $1.17 trillion during the period, up 15% from just over $1 trillion a year earlier.