The U.S. budget deficit last month was the largest ever recorded in November though the Trump administration’s tariffs boosted customs revenue.
The Treasury Department reported that the U.S. ran a deficit of $205 billion last month, an increase of $66 billion, or 48%, from a year ago.
The gain was mostly due a $44 billion shift resulting from December benefits in many government entitlement programs being paid in November this year because Dec. 1 fell on a Saturday. But for the first two months of the fiscal year, the deficit totals $305.4 billion, up 51.4% from the same period last year.
“The budget picture is deteriorating as the U.S. taxes individuals and companies less and spends more, mostly on defense and benefit payments to an aging population,” MarketWatch said. “A growing economy is softening the blow, however, and it’s unclear at this point whether the annual deficit will top $1 trillion this year.”
The Congressional Budget Office currently projects a $973 billion deficit for the current fiscal year, or 4.6% of GDP, climbing as high as 5.4% of GDP in 2022.
In November, revenue declined 1% to $206 billion as individual withheld and FICA taxes fell by 2%, while corporate taxes fell by 23%. Spending rose 18% to $411 billion, reflecting a 35% jump in Medicare payments, a 27% increase in defense spending and a 74% increase in Veterans Affairs costs.
Customs duties doubled to $6 billion on tariffs that the U.S. has imposed on steel and aluminum imports from a number of countries and on $250 billion of Chinese imports. China and other nations have retaliated by imposing tit-for-tat tariffs on U.S. exports.
Analysts had expected a $188 billion deficit for last month.
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