US starts 2027 fiscal year with record October budget deficit of US$404bil
October receipts fell by US$35 billion, or 9%, to US$369 billion, due partly to lower net customs duty collections.
The US government began the 2027 fiscal year with an unprecedented $404 billion budget deficit for October, marking the largest shortfall for a single month on record, according to the Treasury Department. This represents a staggering $120 billion, or 42%, increase compared to the same period in the previous year. The push in outlays, not receipts, led to the widening deficit.
October receipts dwindled by $35 billion, or 9%, to $369 billion, largely due to a decline in net customs duty collections. A significant contributing factor was the reduction in individual non-withheld taxes, which dropped by $29 billion, or 36%, to $29 billion, partly due to delayed tax filing deadlines following the 2025 wildfires in California.
After accounting for adjustments made from benefit payments for November being moved into October, the adjusted deficit would have been $285 billion, a 49% jump from the prior year. However, the total outlays for October reached a record high of $773 billion, a 12% rise from the previous year. The surge in expenditures was primarily driven by a $14 billion, or 80%, increase in USDA spending for farm relief and a $28 billion, or 30%, rise in military spending.
This included a $14 billion payment to military trust funds delayed by last year's government shutdown, along with other increases across various operations, maintenance, and procurement sectors. Interest on the federal debt also climbed by $11 billion, or 11%, to $115 billion for the month.
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