US posts record US$145 billion December deficit as outlays outpace receipts

[WASHINGTON] The US government posted a US$145 billion budget deficit for December, up 67 per cent or US$58 billion from a year earlier due to record outlays that were inflated by calendar shifts in benefit payments and receipts, the Treasury Department said on Tuesday.

The report showed that revenue growth from President Donald Trump’s tariffs may have plateaued, as December net customs receipts totalled US$27.9 billion, down from the low US$30 billion range in recent months but far above the US$6.8 billion recorded in December 2024.

Net customs receipts for the first three months of fiscal 2026, which started on Oct 1, totalled US$90 billion compared to US$20.8 billion in the prior-year period.

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 also could soon rule on legal challenges to Trump’s tariffs under an emergency sanctions law. A ruling against those duties would further cut customs receipts.

The Treasury said that after making adjustments to December budget results in both 2024 and 2025, the December deficit would have been US$112 billion, a decrease of US$14 billion or 11 per cent from the December 2024 budget gap.

Some US$32 billion in January 2026 benefit payments were shifted into December because the new year started on a weekend, while a net US$51 billion in December 2024 benefits were shifted to other months. But the US$145 billion reported deficit was a record for the month, a Treasury official said.

Military spending in December reached US$98 billion, up US$20 billion or 25 per cent from a year earlier, due in part to the resumption of payments delayed by a government shutdown in October, the Treasury official said.

Lower three-month deficit

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The deficit for the first three months of fiscal 2026, which started on Oct 1, 2025, totalled US$602 billion, down US$109 billion or 15 per cent from the same period a year earlier amid record receipts and outlays.

Fiscal year-to-date receipts totaled US$1.26 trillion, up US$142 billion or 13 per cent from a year earlier and a record for the period, due in part to 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 US$1.83 trillion, up US$33 billion or 2 per cent from the year-earlier period.

The year-to-date outlay growth was fueled by increases in Social Security and healthcare programs, as well as US Treasury public debt interest, which grew US$46 billion, or 15 per cent from a year earlier, to US$355 billion.

The Treasury official said the interest cost increase was driven largely by the growth of the US debt load, adding that the weighted average interest rate paid by the Treasury in December was 3.32 per cent, only slightly above the 3.28 per cent paid a year earlier. REUTERS