U.S. Opens Fiscal Year With Record $404 Billion October Deficit

The federal government ran a $404 billion budget deficit in October, the first month of fiscal 2027 and the largest October shortfall on record, according to Treasury Department data reported by The Economic Times and Transport Topics.

The gap was 42% wider than a year earlier, when the October deficit came to $284 billion, StockAnalysis reported, citing the Monthly Treasury Statement. The Economic Times, citing Reuters, reported that the October figure was $120 billion higher than the same month last year.

US OCTOBER BUDGET DEFICIT HITS RECORD $404 BILLION

The US federal budget deficit surged to $404 billion in October, up 42% from $284 billion a year earlier, according to the Treasury.

Government spending jumped to a record $773 billion, versus $689 billion last year, while…

— *Walter Bloomberg (@DeItaone) November 12, 2026

Government spending rose 12% to $773 billion, the most for any October, while tax receipts fell 9% to $369 billion, according to Transport Topics and StockAnalysis.

Where the money went

Military spending rose $28 billion, or 30%, partly because of a payment to military trust funds that had been delayed by last year’s government shutdown, The Economic Times reported, citing Reuters. Agriculture Department spending rose $14 billion, or 80%, largely because of farm relief payments, according to The Economic Times.

Interest on the federal debt rose 11% to $115 billion, StockAnalysis reported. Transport Topics reported that higher spending on the military, health care and interest on the debt pushed up government outlays for the month.

On the revenue side, net customs collections fell 39% to $19.2 billion from $31.3 billion in October 2025, according to The Economic Times. Transport Topics reported that bigger tariff and corporate tax refunds weighed on receipts, though tariff refunds have slowed since the summer.

The Economic Times reported that the customs decline came after the Supreme Court in February overturned a large portion of President Donald Trump’s tariffs, forcing the government to refund about $166 billion in duties collected under the International Emergency Economic Powers Act.

Individual taxes not withheld from paychecks fell $29 billion, or 36%, StockAnalysis reported, noting that last year’s total had been lifted by later filing deadlines for Californians hit by the 2025 wildfires.

Timing shift, but still higher

Part of the jump reflects the calendar. November benefit payments went out in October in both years because Nov. 1 fell on a weekend, and without that shift the Treasury puts the October deficit at $285 billion, up 49% from a year earlier, according to StockAnalysis.

The Committee for a Responsible Federal Budget said the government borrowed more than $13 billion a day on average in October. “While some of this is due to some payments for November being paid in October, the Congressional Budget Office estimates that when you adjust for those timing shifts, deficits increased by more than $100 billion in October 2026 over the same month in 2025,” the group said in a statement.

A $2.2 trillion year ahead

The government recorded a $1.99 trillion deficit in fiscal 2026, according to Transport Topics, and the Treasury now estimates the gap will grow slightly to roughly $2.2 trillion this year.

Treasury Secretary Scott Bessent has set a goal of bringing the annual deficit down to 3% of gross domestic product, The Economic Times reported. The fiscal 2026 shortfall amounted to 6.2% of GDP, up from 5.8% in fiscal 2025, according to the outlet.

The Treasury expects customs duties to bring in $464 billion in fiscal 2027, a projection The Economic Times reported is higher than the current pace of collections under the tariffs in place.

Sources

• *Walter Bloomberg on X
• The Economic Times
• Transport Topics
• StockAnalysis
• Committee for a Responsible Federal Budget

Reporting by Daily Beltway.