The U.S. federal government's budget deficit reached 1.97 trillion U.S. dollars in the first 11 months of fiscal 2026 through the end of August, one of the highest levels on record for the period, according to data released by the Department of the Treasury of the United States on Friday.
The figure has already exceeded the full-year deficit of 1.775 trillion dollars in the previous fiscal year. The deficit for August alone was 166.8 billion dollars, down 52 percent year on year, but the decline does not signal an improving fiscal picture.
As August 1 fell on a Saturday this year, payments such as Social Security that are normally made on the first of the month were moved into July, artificially reducing August outlays. Adjusted for those calendar shifts, the August deficit was 248 billion dollars, up 7 billion dollars from a year earlier, the Treasury said, indicating that underlying fiscal pressure persists.
September, the final month of the fiscal year, typically records a surplus as corporate income tax payments come due, but it is unlikely to change the full-year trajectory.
Meanwhile, rising interest rates have pushed net interest payments on government debt above 1 trillion dollars, now exceeding national defense and most other major federal spending categories.
Only Social Security and the Department of Health and Human Services, which oversees Medicare and other programs, rank higher.
With large volumes of low-interest Treasury debt maturing and being refinanced at higher costs, that figure is expected to keep climbing, putting the U.S. debt burden on a path that could set historic records in the coming years.
US federal deficit hits 1.97 trln USD in fiscal 2026
