US annual budget gap hits nearly USD2trn, largest in 5 years

Business Recorder reported that the US federal deficit grew by USD217 billion to almost USD2 trillion for fiscal 2026, the biggest shortfall in half a decade according to Treasury figures released Friday. Officials attributed the widening gap partly to tariff refunds and record outlays on debt servicing, with total federal debt now above USD40 trillion. Spending on Social Security, Medicare and defence also climbed, adding to the pressure on public finances.

Receipts reached a record USD5.40 trillion, rising USD169 billion or 3 percent, yet outlays grew faster to USD7.40 trillion, an increase of USD386 billion or 6 percent. Debt interest payments hit a record USD1.36 trillion after a 12 percent jump, and now trail only Social Security and combined Medicare and Medicaid costs. Tariff revenue fell after a Supreme Court decision this year negated a large share of the levies imposed during Trump's first term, leading to USD145 billion in refunds.

Defence outlays rose 6 percent to USD917 billion, though a Treasury official could not say how much of that increase stemmed from the conflict with Iran. The deficit equalled an estimated 6.2 percent of GDP, compared with 5.8 percent in fiscal 2025, and September alone registered a USD27 billion deficit versus a USD198 billion surplus a year earlier.