The United States ran a budget deficit of $409 billion in October, according to the Congressional Budget Office, an increase of $125 billion on the same month a year earlier. The figure adds to mounting pressure on Treasury borrowing at a time when the government is paying more in interest and welfare costs than at any point in recent years.
Revenues fell by $36 billion compared with October 2025, while outlays rose by $89 billion. Part of the swing reflects timing. Some payments that were due on November 1 were brought forward into October, which inflated spending in the month and widened the reported gap. Analysts typically treat such shifts as distortions rather than a change in the underlying trend, but they still feed into the headline numbers that markets and policymakers watch closely.
The October figures arrive after a summer in which the Treasury reorganised how it manages the national debt. Treasury Secretary Scott Bessent's so-called « Treasury twist » involved buying back long-term government debt while issuing more short-term bills. The Treasury has not publicly confirmed the detailed workings of the strategy. JPMorgan's James Sullivan has criticised the approach as risky, arguing that it leaves the government more exposed to changes in short-term interest rates.
The strategy has coincided with lower long-term yields, which have eased volatility in bond markets. Officials have pointed to the Federal Reserve's stance on inflation as a factor in that calmer environment. Lower long-term yields also make borrowing cheaper in the near term, a point that supporters of the approach emphasise. Fiscal hawks, however, remain unconvinced that the trajectory of public finances is sustainable.
The broader picture for the 2026 fiscal year is stark. The federal deficit reached $1.9 trillion, equal to 6.2 per cent of gross domestic product, up from 5.8 per cent. Over the past fifty years, the deficit has averaged 3.8 per cent of GDP. Interest payments on public debt cost $1.14 trillion over the year, a sum that now rivals some of the largest programmes in the federal budget.
Federal revenues rose to $5.4 trillion, an increase of $169 billion. That gain was outpaced by a rise in outlays of $217 billion, driven mainly by Social Security, Medicare and Medicaid. Those programmes account for a large and growing share of federal spending as the population ages, and their costs are a central reason why critics say the deficit is unlikely to narrow without changes to taxes or benefits.