The United States opened the 2027 fiscal year with a record budget deficit for October, as falling receipts and rising spending combined to widen the gap by more than two-fifths from a year earlier.
The Treasury Department said on Thursday that the deficit for October, the first month of the federal government’s fiscal year, reached $404 billion. That was $120 billion, or 42 per cent, higher than the same month last year and the largest October shortfall on record.
Receipts fell by $35 billion, or 9 per cent, to $369 billion. Net customs duty collections dropped 39 per cent to $19.2 billion, down from $31.3 billion a year earlier. Individual non-withheld tax receipts were $29 billion, or 36 per cent, lower, partly because last year’s figure was swelled by tax filing deadlines delayed for Californians affected by the 2025 wildfires.
Spending, meanwhile, climbed to a record for the month. Outlays totalled $773 billion, up $84 billion, or 12 per cent, from October last year. Agriculture Department spending rose $14 billion, or 80 per cent, on farm relief payments, while military spending increased $28 billion, or 30 per cent, reflecting an October payment to military trust funds that had been delayed by last year’s government shutdown. Gross interest on the federal debt rose $11 billion, or 11 per cent, to $115 billion.
The Treasury said that after adjusting for calendar effects — November benefit payments were shifted into October in both fiscal years — the deficit would have been $285 billion, still $94 billion, or 49 per cent, higher than a year earlier.
The figures are a further setback for Treasury Secretary Scott Bessent, who has set a goal of cutting the deficit to 3 per cent of gross domestic product. The government closed fiscal 2026 with a deficit of nearly $2 trillion, the largest in five years, equal to about 6.2 per cent of GDP, up from 5.8 per cent in fiscal 2025.
The Congressional Budget Office had estimated the October deficit at $409 billion in a forecast published on 10 November, close to the official figure released on Thursday.
Sources: Reuters — “US starts 2027 fiscal year with record October budget deficit of $404 billion” (https://www.reuters.com/business/us-starts-2027-fiscal-year-with-record-october-budget-deficit-404-billion-2026-11-12/); US Department of the Treasury, Monthly Treasury Statement, October 2026.
