US Budget Deficit Falls 2% to US$1.775T in Fiscal 2025

• The U.S. budget deficit shrank by US$41.0Bn to US$1.775Tn in the 2025 fiscal year, despite a US$118.0Bn increase in revenues from President Donald Trump's tariffs, the Treasury Department reported on Thursday.
• The results for the year ended September 30, which include nearly nine months of Trump's second term in the White House, compared to a US$1.817T deficit in fiscal 2024. It was the first time the annual deficit had fallen since 2022, when the unwinding of COVID-19 relief programs brought spending down.
• The smaller deficit was aided by a record US$195.0Bn in net customs receipts for the fiscal year, an increase of US$118.0Bn from the prior year as new Trump tariffs rolled in. Customs receipts in September reached a new record high of US$29.7Bn, but the pace of increase slowed from August, when US$29.5Bn was collected. Total receipts for fiscal 2025 were a record US$5.235T, up US$317.0Bn, or 6.0%, from the US$4.918T in fiscal 2024. Fiscal 2025 outlays also were a record at US$7.01T, up US$275.0Bn, or 4.0%, from US$6.735T in the prior fiscal year.
• A U.S. Treasury official said the department calculated an estimated deficit-to-GDP ratio of 5.9% for fiscal 2025 but declined to say what GDP estimate was used. This figure compares to an actual 6.3% deficit-to-GDP ratio for fiscal 2024. For the full 2025 fiscal year, the Department of Education suffered the biggest cut in outlays, down US$233.0Bn, or 87.0% from the prior year to just US$35.0Bn.
• That cut and the higher customs receipts masked continued increases in outlays for the Social Security retirement plan, the Medicare and Medicaid healthcare programs and interest on the U.S. federal debt.
• The interest expenditure reached a record US$1.216T for the full fiscal year, up US$83.0Bn, or 7.0%, from fiscal 2024, making it the second-largest expenditure item after Social Security. Expenses for that program reached US$1.647T, up US$127.0Bn, or 8.0%, from the prior fiscal year.

(Source: Reuters)