US budget deficit hits $624 billion in first two months, $3.5 trillion expected for 2025.

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The U.S. budget deficit surged by a staggering $367 billion in November 2024, exceeding expectations by $14 billion. This sharp spike highlights the growing financial strain faced by the government. As of the first two months of the 2025 fiscal year, the total deficit stands at a record-high $624 billion, marking a 64% increase from the same period in 2024. This figure already surpasses the $380 billion deficit recorded last year and has eclipsed the deficit levels seen during the 2020 pandemic-induced spending spree. For context, the budget gap averaged three times lower during the 2013-2017 period, emphasizing the rapid escalation of the debt crisis.

The spending numbers are equally concerning. In November alone, the U.S. government spent $668 billion, which, when combined with October’s $584 billion in spending, brings the total outlay for the first two months of the fiscal year to $1.25 trillion. However, revenue collection has been far below the spending levels, with only $628 billion in tax receipts for the same period, contributing to a $624 billion deficit. This is the largest deficit recorded for the first two months of the fiscal year, surpassing even the $429 billion deficit from the same months in 2021, a period also marked by significant government expenditure during the pandemic.

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As the numbers continue to mount, the U.S. government is on track to exceed a $3.5 trillion deficit for fiscal year 2025, a figure that would set a new record for peacetime deficits. If this projection holds true, the total deficit for 2025 will far surpass even the unprecedented levels reached during the COVID-19 pandemic, when the federal government spent heavily to mitigate the effects of the crisis.

The implications of these figures are profound. With mounting government debt and escalating spending, the U.S. is facing a fiscal crisis that threatens to undermine economic stability. This is so, so bad. In other words, if we completely eliminated all military spending, it would only cover three months of deficit spending. The gap between federal spending and revenue is widening at an alarming rate, and the increasing deficit could further strain the economy in the years to come. This growing budget shortfall will likely lead to higher borrowing costs, potentially hindering long-term economic growth and stability.

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The rapid increase in the deficit serves as a stark reminder of the widening gap between government expenditures and revenues, which continues to fuel concerns about the nation’s fiscal future. The potential for a record-breaking deficit in 2025 highlights the pressing need for policy reforms to address this unsustainable trajectory. Without substantial changes to the government’s fiscal policies, the country risks facing even more significant economic challenges in the coming years.

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