The US budget deficit decreased by $US35 billion ($52.5 billion), or 9 per cent, in August compared to the previous year, reaching $US345 billion. According to the Treasury Department, this reduction was partially driven by an increase in net customs receipts of approximately $US22.5 billion, resulting from tariffs implemented under President Donald Trump’s policies.
Despite the August improvement, the year-to-date deficit for the 2025 fiscal year has risen by $US76 billion, or 4 per cent, to $US1.973 trillion with only one month remaining. A US Treasury official refrained from making definitive projections regarding whether the deficit would surpass $US2 trillion for the entire fiscal year, which concludes on September 30. However, they noted that September generally experiences higher revenue due to quarterly tax payment deadlines.
The official highlighted that the fiscal-year-to-date deficit represents the third-highest deficit for the equivalent period. Only the COVID-era deficits of $US3.007 trillion in fiscal 2020 and $US2.711 trillion in fiscal 2021 were larger. August receipts increased by $US38 billion, or 12 per cent, reaching $US344 billion, while August outlays increased by $US2 billion to $US689 billion. Both receipts and outlays reached new records for the month.
According to Oxford Economics Lead US Economist Nancy Vanden Houten, taking calendar shifts into account would produce a $US47 billion deficit reduction in August instead of the $US35 billion reduction. She noted that, “With one month left in fiscal 2025, we expect the deficit for the year to come in at $US1.78 trillion, reflecting the fact that September is typically a surplus month due to strong estimated individual and corporate income tax collections.”
