The federal budget deficit was a bit smaller in January than it was a year ago, as outlays exceeded revenues by a relatively modest $22 billion, compared to $38 billion in 2023, according to the latest Treasury Department data released Monday.
Nevertheless, the deficit continues to grow rapidly on a cumulative basis, totaling $532 billion in the first four months of the 2024 fiscal year, which began in October. The four-month total this year is 16% higher than the four-month total recorded a year ago.
Rising interest costs are playing a central role in the accelerating growth of the deficit. The Treasury paid $357 billion in interest between October 2023 and January 2024, a 37% increase from the interest paid during the same period last year.
As Bloomberg’s Viktoria Dendrinou notes, the aggressive interest rate hikes rolled out by the Federal Reserve as part of its effort to control inflation have made debt more expensive. “The weighted average interest rate on outstanding US interest-bearing government debt was 3.15% at the end of January – the highest since May 2010 and marking a roughly 70 basis point increase from a year before,” Dendrinou writes.