US federal deficit reaches $409 billion in October, CBO estimates
The federal government incurred a deficit of $409 billion in October, the first month of the 2027 fiscal year, the Congressional Budget Office estimated — more than $100 billion a week. That is $125 billion more than the shortfall recorded last October, with revenues $36 billion lower and outlays $89 billion higher, the CBO said.
The CBO suggested October's deficit was higher partly because of shifts in the timing of certain federal payments that would otherwise have been made on 1 November, a date that fell on a weekend in both 2025 and 2026 and so pushed those payments into October each year.
The figures follow a summer of debt reshuffling at the Treasury. Secretary Scott Bessent described the operations as a "Treasury twist" — buying back longer-dated debt while issuing shorter-term paper — though the department has not confirmed the strategy in those terms. JPMorgan's co-head of global fundamental research, James Sullivan, likened it to "paying your mortgage with your credit card. It can work for a while, but eventually the mismatch starts to become more obvious."
Longer-dated yields have since fallen, helped by firm Federal Reserve talk on inflation and a recent sell-off in artificial intelligence stocks, making government borrowing cheaper at the long end. The CBO's review showed the deficit for fiscal 2026 at 6.2% of GDP, up from 5.8% a year earlier and above the 50-year average of 3.8%. The full-year gap was $1.9 trillion, including $1.14 trillion of interest on the public debt. Revenue rose $169 billion to $5.4 trillion, while outlays climbed $217 billion, driven mainly by Social Security, Medicare and Medicaid.
