Key Takeaways
- The U.S. government posted a $145 billion budget deficit for December, up 67% from a year earlier
- Record outlays and calendar shifts in benefit payments and receipts contributed to the increased deficit
- Revenue growth from President Trump’s tariffs may have plateaued, with December net customs receipts totaling $27.9 billion
- The deficit for the first three months of fiscal 2026 totaled $602 billion, down $109 billion or 15% from the same period a year earlier
- Record receipts and outlays were reported for the first three months of fiscal 2026, with receipts totaling $1.225 trillion and outlays reaching $1.827 trillion
Introduction to the Budget Deficit
The United States government recently reported a $145 billion budget deficit for the month of December, which represents a 67% increase from the same period a year earlier. This significant increase can be attributed to record outlays that were inflated by calendar shifts in benefit payments and receipts. The Treasury Department released this information, providing insight into the current state of the government’s finances. The report also highlighted the impact of President Trump’s tariffs on revenue growth, which may have plateaued.
Analysis of the Deficit
The December deficit of $145 billion is a record for the month, according to a Treasury official. However, after making adjustments to December budget results in both 2024 and 2025, the December deficit would have been $112 billion, a decrease of $14 billion or 11% from the December 2024 budget gap. This adjustment takes into account the shift of $32 billion in January 2026 benefit payments into December, as well as the shift of a net $51 billion in December 2024 benefits to other months. The Treasury official noted that the reported deficit was still a record for the month, despite the adjustments.
Impact of Tariffs on Revenue Growth
The report showed that revenue growth from President Trump’s tariffs may have plateaued, with December net customs receipts totaling $27.9 billion. This is down from the low $30 billion range in recent months but still far above the $6.8 billion recorded in December 2024. The Trump administration implemented some tariff-cutting trade deals in November, including 10 percentage-point reductions in duties on imports from China and South Korea. The Supreme Court could soon rule on legal challenges to Trump’s tariffs under an emergency sanctions law, which could further cut customs receipts.
Three-Month Deficit and Receipts
The deficit for the first three months of fiscal 2026, which started on October 1, 2025, totaled $602 billion, down $109 billion or 15% from the same period a year earlier. This decrease is attributed to record receipts and outlays. Fiscal year-to-date receipts totaled $1.225 trillion, up $142 billion or 13% from a year earlier, and a record for the period. The increase in receipts is due in part to the collection of tax payments delayed by last year’s California wildfires. Outlays for the first three months of fiscal 2026 were also a record, reaching $1.827 trillion, up $33 billion or 2% from the year-earlier period.
Outlay Growth and Interest Costs
The year-to-date outlay growth was fueled by increases in Social Security and healthcare programs, as well as U.S. Treasury public debt interest. The interest cost increase was driven largely by the growth of the U.S. debt load, with the weighted average interest rate paid by the Treasury in December being 3.32%, only slightly above the 3.28% paid a year earlier. Military spending in December reached $98 billion, up $20 billion or 25% from a year earlier, due in part to the resumption of payments delayed by a government shutdown in October.
Conclusion and Future Outlook
In conclusion, the U.S. government’s budget deficit for December was $145 billion, a record for the month. The deficit for the first three months of fiscal 2026 totaled $602 billion, down $109 billion or 15% from the same period a year earlier. The report highlights the impact of President Trump’s tariffs on revenue growth, which may have plateaued. The Treasury official noted that the interest cost increase was driven largely by the growth of the U.S. debt load, which will be an important factor to consider in future budget planning. As the government continues to navigate the complexities of budget management, it will be essential to monitor the effects of tariffs, outlays, and interest costs on the overall fiscal health of the country.
