Sep 4, 2023 - Economy

Federal deficit unexpectedly set to double this year

Illustration of an arrow line filled with a money pattern going upward on a graph.

Illustration: Megan Robinson/Axios

The federal deficit is expected to nearly double this year, from about $1 trillion last year to $2 trillion for the fiscal year ending Sept. 30

Why it matters: There's no precedent for deficits this large, as a share of the economy — outside war, deep recession or pandemic.

  • The WashPost's Jeff Stein reported Sunday on the stunning projected figure from the Committee for a Responsible Federal Budget.

Between the lines: Such huge spending imbalances contribute to high interest rates for consumers — including mortgages — in the short run.

  • In the long run, it means interest costs will likely squeeze all other federal priorities.

What's happening: Bigger interest payments + lower tax receipts, despite strong economic growth.

  • "A strong economy usually reduces the deficit. Not this time," Stein writes.

Reality check: The annual deficit was even higher — $2.8 trillion — in 2021, amid record COVID spending, according to the Congressional Budget Office.

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