US posts record $145b budget deficit for December
The Treasury Department said the U.S. government posted a budget deficit of $145 billion ($217 billion) in December, up 67 percent, or $58 billion ($87 billion), from the previous year, due to record spending inflated by calendar changes in benefit payments and revenues.
The report showed that revenue growth from President Donald Trump’s tariffs may have stabilized as net customs revenues for December came in at US$27.9 billion (US$41.8 billion), down from the low range of US$30 billion (US$45 billion) in recent months, but well above the US$6.8 billion (US$10.2 billion) recorded in December 2024.
Net customs revenues for the first three months of fiscal 2026, which started on October 1, amounted to US$90 billion (US$135 billion), compared to US$20.8 billion (US$31.1 billion) in the same period the previous year.
The Trump administration implemented some tariff-cutting trade deals in November, including 10 percentage point reductions in tariffs on imports from China and South Korea. The Supreme Court may also rule soon on legal challenges to Trump’s tariffs under emergency enforcement legislation. A decision against these taxes will lead to further cuts in customs receipts.
The Treasury said that after adjustments were made to both the 2024 and 2025 December budget results, the December deficit would be US$112 billion (US$168 billion), a decrease of US$14 billion (US$21 billion), or 11%, compared to the December 2024 budget deficit.
Nearly US$32 billion ($48 billion) in welfare payments in January 2026 were shifted to December due to the new year starting on a weekend, while a net US$51 billion ($76 billion) in benefits in December 2024 were shifted to other months. But a Treasury official said the reported $145 billion ($217 billion) deficit was a record for the month.
Military spending in December reached US$98 billion (US$147 billion), an increase of US$20 billion (US$30 billion), or 25 percent from the previous year, due in part to the resumption of payments delayed by the government shutdown in October, the Treasury official said.
The deficit in the first three months of fiscal 2026, which began on October 1, 2025, was $602 billion ($901 billion), down $109 billion ($163 billion) or 15 percent from the same period a year earlier, due to record revenues and spending. Year-to-date fiscal revenues totaled US$1.225 trillion (A$A1.834 trillion), up US$142 billion (US$213 billion), or 13 per cent, from the previous year, a record for the period, due in part to the collection of tax payments delayed by last year’s California wildfires.
Spending for the first three months of fiscal 2026 also broke a record, reaching US$1.827 trillion (A$A2,735) trillion, an increase of US$33 billion (US$49 billion), or 2.0%, compared to the same period the previous year.
The year-to-date spending increase was driven by increases in Social Security and healthcare programs, as well as U.S. Treasury public debt interest, which increased by $46 billion ($69 billion), or 15 percent from the previous year, to $355 billion ($531 billion).
The increase in the interest cost was largely due to the growth in the US debt burden, the Treasury official said, adding that the weighted average interest rate paid by the Treasury in December was 3.32 percent, only slightly above the 3.28 percent paid the previous year.
