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United States

US records $404 billion October budget deficit, a record for the month

Lower tax receipts and higher spending widened the deficit at the start of fiscal 2027, a setback for federal fiscal goals and borrowing needs.

Photo: Raleigh News & Observer

What happened

The US government began the 2027 fiscal year with a budget deficit of $404 billion for October, according to Treasury Department data released on Thursday. Raleigh News & Observer+3 The October deficit was a record for the month and was up 42% from the year-earlier period, an increase of about $120 billion. Raleigh News & Observer+2 Receipts fell 9% to $369 billion, partly because net customs collections dropped 39% to $19.2 billion from October 2025. Raleigh News & Observer+2 Outlays rose to $773 billion, with higher spending on the military, healthcare and interest on the debt. tradingeconomics.com+1 Accelerated payments for military personnel, veterans and Medicare were made in October because November 1 fell on a Sunday. arkansasonline.com+1

Around it

The record October deficit follows a full-year fiscal 2026 deficit of nearly $2 trillion, the largest shortfall in five years, which was estimated at 6.2% of GDP. Raleigh News & Observer+1 Treasury Secretary Scott Bessent has set a goal of reducing the deficit to 3% of US GDP. Raleigh News & Observer+1 Individual non-withheld tax receipts fell 36% to $51 billion, partly because the year-earlier period was boosted by delayed filing deadlines for Californians affected by wildfires. Raleigh News & Observer+1 Tariff refunds have slowed since the summer, according to the Yahoo Finance report. Yahoo Finance

What comes next

The Treasury estimated that the US budget gap will widen slightly this year to roughly $2.2 trillion. Yahoo Finance

Sources

  1. Raleigh News & ObserverUS starts 2027 fiscal year with record October budget deficit of $404 billion
  2. tradingeconomics.comUS Budget Deficit Widens More Than Forecast in October
  3. arkansasonline.comUnited States begins new fiscal year with $404.1 billion deficit
  4. Yahoo FinanceUS logs US$404 billion deficit in first month of fiscal year
  5. Tacoma News TribuneUS starts 2027 fiscal year with record October budget deficit of $404 billion
  6. FortuneAfter a summer of reorganizing public debt, the Treasury borrowed more than $100 billion a week in October

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