The U.S. budget deficit exponentially increased and reached around $257 billion in October, primarily due to one-off factors.
According to a report by the Treasury Department on Wednesday, the figure was a sharp increase of 287% from October 2023's $67 billion deficit. In October 2023, the deficit was cut nearly in half due to the calendar adjustments that were made in benefit payments.
A look at the month of October last year showed that the Treasury received tax payments of approximately $75 billion. These payments were deferred by wildfires in California, along with other disasters that occurred that year.
The official from the Treasury noted that had it not been for the adjustments that were made, the deficit for October 2024 would have been approximately $47 billion, which would only be 22% higher than the previous year, Reuters reported.
The result of the budget marks the first month of the fiscal year for 2025. The full fiscal year 2024 had a $1.83 trillion deficit, which is considered as the largest outside the time of COVID-19.
Federal receipts for the month of October 2024 slid 19% YOY to $327 billion. Outlays on the other hand increased by 24% to $584 billion.
Social Security, Medicare and military spending outlays also increased, save for the 8% decline in the public debt service costs of the Treasury. Since August 2023, this was considered as the first year-on-year decline.
One can recall that in the fiscal year of 2020, President-elect Donald Trump presided over $3.1 trillion U.S. budget deficit, which was considered as the largest ever resulting from the spending incurred at the height of the COVID-19 pandemic. Along with the spending, the pause in economic activity has affected federal revenues.
On Tuesday, billionaire Elon Musk was named by Trump to head a newly formed non-government body called the Department of Government Efficiency (D.O.G.E). Alongside Trump would be former presidential candidate Vivek Ramaswamy. The new department is aimed to slash government spending and to improve efficiency within the bureaucracy.
In a previous statement by Musk, he noted that with the formation of the new department, he would be able to cut the government budget by at least $2 trillion. However, he did not specify the timeline by which he aims to accomplish it.
