First quarter of fiscal year sees U.S. deficit surpassing $500 billion

US Government Adds Half a Trillion to Budget Deficit in Q1 2024

US President Joe Biden and Treasury Secretary Janet Yellen

Introduction

The U.S. government has reported that it accumulated an additional $510 billion in budget deficit during the first quarter of fiscal year 2024, according to the Treasury Department.

Rising Deficit

The budget deficit for the period between October 2023 and December 2023 reached nearly $510 billion. This is a significant increase compared to the $129.4 billion shortfall recorded in December alone, which is 52% higher than the previous year. As a result, the total government debt has exceeded $34 trillion for the first time.

Comparing Years

In comparison to the previous year, where the deficit amounted to $1.7 trillion, 2024 is experiencing even higher levels of deficit.

During the first quarter of fiscal 2023, the difference between spending and receipts was $421.4 billion. This represents an increase of $89 billion in fiscal 2024 compared to the previous year. When adjusted for calendar factors, the Treasury Department reported a change of $97 billion between the two years. December’s deficit was more than $34 billion higher than the previous year, mainly due to increased Social Security payments and interest costs.

Predicted Deficit

If the current pace continues, 2024 is projected to end with a deficit slightly over $2 trillion.

Inflation Reduction Act

Despite the Biden administration’s claims that the Inflation Reduction Act would significantly reduce the deficit, the deficit continues to accumulate.

Inflation and Consumer Prices

The rate of inflation has decreased, but the consumer price index rose by 0.3% in December, pushing the 12-month rate to 3.4%. This is higher than the Wall Street consensus and above the Federal Reserve’s goal of 2%.

Debt and Financing Costs

With the Federal Reserve combatting inflation, interest rates remain high. As a result, financing costs for the government in 2023 amounted to nearly $660 billion. Debt as a percentage of gross domestic product rose to 120% in the third quarter of 2023.

Read More of this Story at www.cnbc.com – 2024-01-11 19:00:01