The US government posted a higher deficit of $284 billion for October in a report delayed by the recent federal government shutdown, reflecting record tariff revenue offset by the shift of some November benefit payments to last month's data, the Treasury Department said Tuesday.

Budget results for the first month of fiscal 2026 were delayed by the 43-day shutdown of many federal agencies, which caused delays in some payments, such as government employee salaries, a Treasury official said.

Last month's deficit rose $27 billion, or 10%, from the $257 billion deficit recorded in October 2024, largely due to the shift of approximately $105 billion in November benefit spending for several military and healthcare programs to October.

Accounting for this shift, the October deficit would have been approximately $180 billion, a 29% decrease from the adjusted October 2024 deficit of $252 billion.

Spending for October, including November benefit payments, totaled $689 billion, up 18% from $584 billion in October 2024. The Treasury official said the department did not have a precise estimate of how much spending was reduced due to delayed payments from various agencies due to the government shutdown, but the Treasury Department believes the reduction is less than 5% of total spending.

Federal law requires that wages and other obligations outstanding during the government shutdown be paid in full when funding is restored. October revenues totaled $404 billion, a record for the month and a 24% increase from the $327 billion collected in October 2024.

TARIFF REVENUE REACHES MONTHLY RECORD HIGH

Net tariffs were one of the largest revenue drivers in October, reaching a new all-time monthly record of $31.4 billion due to new import tariffs imposed by President Donald Trump since his return to the White House in January. This inflow surpassed the previous record of $29.7 billion in September and more than quadrupled the $7.3 billion recorded in October 2024.

Trump said Monday that tariff revenue would soon "skyrocket" to a new record, arguing that most businesses had already depleted their inventory of imported goods before his tariffs and would now have to import goods at higher tariffs. His comments on the Truth Social website appeared to be partly aimed at the U.S. Supreme Court, where justices earlier this month cast doubt on the legality of the tariffs Trump imposed under emergency legislation.

"I eagerly await the United States Supreme Court's decision on this urgent and time-sensitive matter so that we can continue, without interruption, to MAKE AMERICA GREAT AGAIN!" Trump wrote.

Meanwhile, the Congressional Budget Office (CBO) said last week that recent tariff reductions resulting from U.S. trade deals with partner nations have led the agency to cut its estimate of how much Trump's tariffs will reduce the U.S. budget deficit over the next decade by 25% to $3 trillion, including interest costs, from the $4 trillion the agency projected in August.

The revenue increase was also driven by $80 billion in unwithheld individual tax receipts received in October, representing a $35 billion, or about 75%, increase from October 2024. The Treasury official said this increase largely reflected delayed payments due to the California wildfires, where affected residents were allowed until October 15th to file and pay their taxes.

Unwithheld individual income tax receipts rose $16 billion, or 6%, from the same period last year to $279 billion. However, corporate tax receipts in October were stagnant at $18 billion, and the Treasury official attributed the lack of growth to corporate tax breaks included in the Republican-passed tax cuts and spending bill this year.

The U.S. Treasury Department's interest expense reached $104 billion in October, up $22 billion, or 27%, from October 2024, reflecting a higher debt burden and a slightly higher weighted average interest rate of 3.36%, the Treasury official said. (alg)

Source: Reuters