The deficit was smaller than 2024, but spending was still growing
This article first appeared on SchiffGold.
The Federal Government publishes the spending and revenue numbers on a monthly basis. The charts and tables below give an in depth review of the Federal Budget, showing where the money is coming from, where it is going to, and the surplus or deficit.
The government fiscal year closes at the end of September, but this analysis will look at the calendar year budget. As shown below, the last three months all saw deficits, with 5 of the last 6 months showing deficit of more than $100B.
Figure 1: Monthly Federal Budget
Looking at the average monthly deficit, January and February were both worse than average where March was slightly better.
Figure 2: Current vs Historical
We can look at the quarter in aggregate using the Sankey diagram below that shows the very large $566B deficit (annualized to $2.3T)!
The big concern with the chart below is how much Interest Expense has moved up, making up 13.6% of all spending in Q1. This is now the second largest line item behind only Social Security. This is how debt spirals work. The deficit now makes up 31% of all spending, which means that the US borrows 1 in every 3 dollars it spends.
Figure 3: Quarterly Federal Budget Sankey
This latest quarter was slightly better than last Q2 and also better than Q4. That is a good trend, but the numbers are still so bad that it is hard to see any positivity in these numbers.
Figure 4: Quarterly Historical Deficit/Surplus for Previous Five Years
The next two charts show the quarterly revenue and costs broken down by expense type. You can see the impact of the tariff revenue below, reaching $90B in Q4, but dropping to $76B as they were struck down by the Supreme Court.
Figure 5: Quarterly Receipts
On the flip side, you can see that spending has been relatively flat over the last 8 quarters. While still very high, it’s good that it is not growing in large chunks.
Figure 6: Quarterly Outlays
Interest Expense has ballooned higher to $1T on a trailing twelve month basis. This is deadly for the budget. $1T a year in just interest expense is a massive thorn in the side of the US government.
Figure 7: TTM Interest Expense
Zooming out and looking over the history of the budget back to 2015 shows a more complete picture. The change since Covid is quite dramatic. In 2019, the deficit was $1.02T. As of March last year, it was $2T. Ironically, the most recent TTM is smaller at $1.6T deficit.
Figure 8: Trailing 12 Months (TTM)
The next two charts zoom in on the recent periods to show the change when compared to pre-Covid. These charts show spending and revenue on a trailing 12 month basis period over period. The last 12-months was a record revenue number, so was spending but it did not grow as fast.
The reason for the smaller deficit over the last year can be attributed to tarriffs, higher income taxes, and higher Social Security. With stagnant wages, these is pinching people more and more.
Figure 9: Annual Federal Receipts
Figure 10: Annual Federal Expenses
Finally, we finish with a Sankey showing TTM Deficit was -$1.63T which is a massive issue going forward, representing 23% of all government spending. The government cannot afford to keep printing such massive debt figures.
Figure 11: TTM Federal Budget Sankey