The Biden administration reported a budget deficit exceeding $1.8 trillion for fiscal year 2024, marking an increase of over 8% from the previous year and ranking as the third highest on record, as disclosed by the Treasury Department on Friday.
Despite achieving a modest surplus in September, the deficit amounted to $1.833 trillion, which is $138 billion higher than the previous year. Larger deficits were only recorded in 2020 and 2021, during a period when the government invested trillions in response to the Covid-19 pandemic.
The deficit emerged despite record revenues of $4.9 trillion, which were insufficient compared to expenditures of $6.75 trillion.
The national debt has grown to $35.7 trillion, reflecting an increase of $2.3 trillion since the end of fiscal 2023. A contributing factor to the debt and deficit situation has been the Federal Reserve’s high interest rates intended to combat inflation.
Interest expenses for the year reached $1.16 trillion, marking the first occasion this figure has exceeded the trillion-dollar threshold. After accounting for interest earned on government investments, the net total was a record $882 billion, positioned as the third-largest budget outlay, following Social Security and health care.
The average interest rate on government debt was reported to be 3.32% for 2024, rising from 2.97% the previous year, according to a Treasury official.
In September, the government achieved a surplus of $64.3 billion, partially due to calendar adjustments that shifted benefit payments to August, which experienced a deficit of $380 billion, the largest monthly deficit of the year.
As a percentage of the total U.S. economy, the deficit is currently above 6%, which is historically uncommon during a period of expansion and significantly higher than the 3.7% historical average over the past 50 years, based on information from the Congressional Budget Office.
The Congressional Budget Office anticipates that deficits will continue to rise, reaching $2.8 trillion by 2034. Additionally, it expects the debt to increase from the current level of nearly 100% of GDP to 122% by 2034.
