As the current financial year draws to a close, the U.S. budget deficit widens to $1.90 trillion

With one month left in the financial year, the U.S. federal budget deficit soared in August as rising interest costs continued to weigh on the overall balance of payments. Data released Thursday by the US Treasury showed the size of the deficit reached $1.90 trillion in the 11 months to August, a 24% increase from the previous year. The monthly deficit in August was $380 billion, compared with a surplus adjusted for calendar differences in August 2023. A large part of the single-month difference is due to the rejection of student loan forgiveness. The burden of interest on U.S. debt balances continues to be a major drag on the budget. Interest costs for the first 11 months of the financial year totaled $1.05 trillion, a 30% increase from 2023. Annual interest costs had never exceeded $1 trillion before, but Treasury officials noted that interest costs as a percentage of gross domestic product were higher in the early 1990s.