$1.97 trillion deficit & counting: US gap barely budges

The U.S. federal budget deficit for August contracted to $167 billion, due to decreased expenditures, lower interest payments, and adjusted benefit payments, according to the U.S. Treasury. The fiscal-year-to-date budget gap remained essentially unchanged, totaling $1.97 trillion for the 11 months leading up to August. This deficit surpasses the fiscal 2025 full-year deficit of $1.775 trillion.

August's budget gap represented a 52% decrease compared to the same month a year earlier. However, considering calendar adjustments, indicating some August payments were made in July, the month's deficit reached $248 billion, a $7 billion increase from the previous year. Unadjusted outlays in August declined by 24%, amounting to $527 billion.

Interest payments on the federal debt decreased by $14 billion. The drop in outlays was attributed to changes in inflation accruals, while the fiscal year-to-date data showed a $143 billion increase, or 13%, compared to the same period a year ago. Unadjusted August receipts climbed by $16 billion, or 5%, to $360 billion, including a $12.84 billion net customs receipts inflow, marking the first increase since April.

This increase was primarily due to tariff refunds totaling $10.54 billion for the month, accounting for about a third of the July refunds total of $33.38 billion.