The numbers: The U.S. federal budget deficit narrowed to $67 billion in October, down from $88 billion in the same month last year, the Treasury Department said Monday.
The deficit was slightly smaller than the $70 billion forecast by economists surveyed by the Wall Street Journal.
Key details: In October, government receipts hit a record high as Californians paid tax bills that had been deferred by the Internal Revenue Service earlier this year after the state was hit with severe late-winter storms.
Receipts hit a record high of $403 billion in October, up from $319 billion in the prior month.
Government outlays rose to $470 billion, up from $406 billion in the same month last year.
Interest paid on the national debt almost doubled compared with the prior year. The Treasury paid $88.9 billion in interest, up from $47.6 billion in the same month last year.
Big picture: The federal budget is back in the spotlight because of rising interest rates, a widening deficit and government-shutdown fears.
On Friday, Moody’s Investors Service changed the outlook on the U.S. government’s ratings to negative, citing high interest rates and partisan bitterness in Congress blocking meaningful legislation.
The deficit swelled to $1.7 trillion in fiscal 2023, up 23% from the prior year due, in part, to higher interest-rate payments. Federal debt is now $33 trillion.
Economists expect the annual deficit to be stuck in the $2 trillion range for the foreseeable future, said Greg Valliere, chief strategist at AGF Investments.
October is the first month of the fiscal year.
What are they saying? “Big deficits are here to stay. It is unlikely there will be material fiscal consolidation between now and the 2024 presidential election,” said Mike Pugliese, senior economist at Wells Fargo. “As a result, 2025 is the earliest we might see meaningful efforts at fiscal consolidation.”
Market reaction: The yield on the 10-year Treasury note
slipped to 4.63% in trading on Monday.