View from the US Treasury building on December 30, 2024 in Washington, DC, USA. The U.S. Treasury Department suffered a cyberattack by Chinese state-sponsored attackers in early December.
Celal Gunes | Anadolu | Getty Images
The federal budget fell further into the red in December, with the fiscal deficit in the first quarter increasing by nearly 40% from a year earlier.
The shortfall for the final calendar month of 2024 totaled $86.7 billion, actually down 33% from the same period last year, according to a Treasury report on Tuesday. However, this brought the total for the three-month fiscal year to $710.9 billion, an increase of approximately $200 billion (39.4%) from the same period last year.
The combination of rising fiscal costs, continued spending increases, and declining tax revenues has led to a sharp increase in the budget deficit, pushing the national debt to more than $36 trillion.
While short-term Treasury yields have remained fairly stable over the past month, interest rates at the far end of the duration curve have risen sharply. The latest yield on the benchmark 10-year Treasury note was nearly 4.8%, about 0.4 percentage point higher than it yielded a month ago.
At the same time, spending in the first quarter was 11% higher than a year ago, while revenue was down 2%.
Interest on government bonds will total $308.4 billion in fiscal 2025, an increase of 7% from the previous year. Full-year financing costs are expected to exceed $1.2 trillion, which would surpass the record set in 2024.
The government spent more on interest payments this year than in any other area except social security, defense and health care.
