US starts 2027 fiscal year with record October budget deficit of US$404bil

The US government opened the 2027 fiscal year with a staggering October budget deficit of $404 billion, marking a new record and a significant 42% increase compared to the same period last year, according to the Treasury Department. This sharp rise in the deficit was primarily due to a combination of shrinking receipts and substantial increases in outlays.

October's receipts declined by an estimated $35 billion, or 9%, to $369 billion, largely due to lower net customs duty collections. Moreover, individual non-withheld taxes were $29 billion, or 36%, lower than the previous year's levels, partly because of delayed tax filing deadlines in California following the 2025 wildfires. Adjustments for calendar-related factors, such as the shift of November benefit payments into October, led the Treasury to estimate the adjusted deficit at $285 billion, a 49% increase from the year-ago period.

The October outlays, however, reached an unprecedented $773 billion, a 12% rise from the previous year. This increase was driven by a substantial $14 billion, or 80%, boost in USDA spending for farm relief, a $28 billion, or 30%, rise in military spending, and an extra $11 billion, or 11%, in interest on the federal debt.