What is the federal government’s budget deficit?
Data updated October 29, 2024
About $1.7 trillion deficit in fiscal year (FY) 2023. A budget deficit occurs when the federal government spends more money than it brings in through taxes, customs duties, the sale of assets, and other revenues. When the government has a deficit, it borrows money by selling bonds and other securities in order to pay for it, adding to the national debt. A budget surplus, on the other hand, occurs when the government brings in more money than it spends.
In FY 2023,
$1.7T
was the federal budget deficit
As of September,
$1.8T
was the federal budget deficit so far in FY 2024
The federal government has had a budget surplus in 12 nonconsecutive years since 1933, the most recent occurring in FY 2001. The federal government uses the fiscal year for its budgeting and financial reporting. The federal fiscal year begins on October 1 and ends September 30 the following year. FY 2023, for example, began on October 1, 2022, and ended on September 30, 2023.
Government spending and the health of the economy influence the size of a budget deficit or surplus. Government revenues come primarily from taxes, so when people and businesses are doing well and making money, the government brings in more money. But if the economy is stagnant and people are earning and spending less, government revenues decrease. The government also impacts its revenue and spending by, for example, increasing or decreasing tax rates and increasing or decreasing spending.
The federal government most recently had a budget surplus in FY 2001.
Fiscal year budget surplus or deficit, not adjusted for inflation
The federal deficit more than tripled from $983.6 billion in FY 2019 to $3.1 trillion in FY 2020. That year, the federal government expanded unemployment insurance, sent stimulus checks directly to Americans, provided financial support for small businesses, and increased other spending in response to the COVID-19 pandemic. In FY 2023, the most recent year for which there is complete data, the federal deficit was $1.7 trillion.
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One way to understand the deficit is to compare it to the country’s gross domestic product (GDP). GDP, broadly speaking, is a measure of the value of the US economy. Looking at the deficit in context of GDP accounts for changes in the size of the economy and inflation, allowing for comparisons in the deficit over time.
The deficit was 6.1% of GDP in FY 2023 compared to 5.3% in FY 2022.
Ratio of federal budget deficit or surplus to gross domestic product
Compared to the size of the economy, the deficit reached 26.9% of GDP in FY 1943. It then fell following the end of World War II and the nation had a surplus in FY 1947. From then until the start of the Great Recession in 2007, the deficit exceeded 5% of GDP once. It has done so in eight out of sixteen years since 2007. The FY 2023 deficit was 6.1% of GDP.
While the Office of Management and Budget (OMB) provides final deficit or surplus data, it does not release that data until about five months after the end of the fiscal year. For example, FY 2023 (October 1, 2022–September 30, 2023) deficit data was released in March 2024. For the most up-to-date information, the Department of the Treasury releases estimates shortly after the end of each month. This can provide a preliminary look at the deficit or surplus and may sometimes be more than a year ahead of OMB’s data. As of September, the FY 2024 budget deficit has reached $1.8 trillion. This is higher than the deficit was in the same month of FY 2023.
The FY 2024 federal deficit was $1.8 trillion as of September.
Cumulative monthly deficit, not adjusted for inflation
