U.S. Starts Fiscal Year With Record $404 Billion Deficit

The United States Department of the Treasury reported that the federal government began fiscal year 2027 with a record $404.1 billion deficit in October, representing a 42.1% increase over October 2025. Federal outlays rose 12% to $773 billion, driven primarily by spending on Medicare, Social Security, and national defense. The Treasury attributed the spike partly to accelerated payments for military personnel and veterans because November 1 fell on a Sunday.

Federal receipts fell nearly 9% to $368.9 billion. This decline was impacted by tariff refunds issued following a February Supreme Court of the United States decision that nullified the use of the International Emergency Economic Powers Act. The U.S. ended the previous fiscal year with a total deficit of nearly $2 trillion.

Total public debt reached $40.58 trillion as of November 10, bringing the government closer to its $41.1 trillion debt ceiling. The Bipartisan Policy Center estimates the limit will be hit between late winter and mid-summer 2027, which could lead to a default if Congress fails to act. This fiscal pressure arrives as the Democratic Party prepares to take control of both the U.S. House of Representatives and the U.S. Senate following recent midterm elections.