Deficit breakdown

The U.S. Department of the Treasury released yesterday its Monthly Treasury Statement (MTS) for October 2025, revealing a federal budget deficit of $284.35 billion for the first month of fiscal year 2026. This figure marks a 10.4% increase from the $257.45 billion deficit recorded in October 2024. While the headline number suggests fiscal pressures are intensifying, a deeper analysis reveals a mix of one-off timing effects, policy-driven revenue boosts, and lingering disruptions from a recent government shutdown. Total outlays were $688.72 billion, up 17.9% from $584.22 billion the prior year, outpacing a robust 23.7% rise in receipts to a monthly record of $404.37 billion (up from $326.77 billion). Net interest payments on the national debt consumed $90.87 billion (gross interest was $104.40 billion), a 27% increase from the prior year, driven by a ballooning debt stock exceeding $36 trillion and average interest rates climbing to 3.36%. Breaking down receipts, individual income taxes led the gains at $216.95 billion. Corporate taxes remained flat at $15.07 billion, reflecting ongoing tax incentives from the OBBB. The standout performer was customs duties, which hit a monthly record of $31.35 billion—more than quadruple the $7.3 billion from October 2024, fueled by Trump tariffs. However, Mandatory spending, including social security and Medicare totaling $228Bn, of which half, was supposed to be included in the November budget, but since Nov 1st was a Sunday, was assigned to October, increasing the deficit figure. After adjustments, the total figure is worrisome but not as much as the headline number would suggest. The biggest concerns continue to be debt servicing and the inability by Congress to cut spending. It is also important to note that if the SCOTUS concludes that tariffs are illegal, the deficit will be adjusted upward, worsening the picture. Gold, silver and bitcoin went up on the news, as the deficit continues to show a grim picture for the U.S. economy.

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