July US federal deficit widens By Reuters

(Reuters) – The U.S. government posted a budget deficit of $244 billion for July, up 10 percent from a year earlier, but accounting for timing differences, the gap would have been $45 billion smaller , the Treasury Department said Monday.

The Treasury said last month’s deficit widened by $23 billion from the $221 billion deficit in July 2023. Economists polled by Reuters had forecast a deficit of $242 billion for July.

The nominal increase was largely the result of lower-than-usual benefit spending last July — for Medicare in particular — because those payments were made in June 2023 due to the start of last July falling on a weekend.

Taking those and other adjustments into account, the Treasury said last month’s deficit would have been 16 percent below the July 2023 gap.

Receipts in July were $330 billion, up 20% from a year earlier, but adjusting for deferred tax receipts would have increased 12%.

Spending in July rose 16 percent to $574 billion, led by a $72 billion increase in Medicare spending. Last year’s spending, however, was artificially low because payments were distributed at the end of June 2023. Taking these and other adjustments into account, spending would have been 1 percent lower.

However, federal debt service costs continue to rise. Interest on the debt rose 21 percent to $89 billion last month, and the weighted average interest rate rose 49 basis points to 3.33 percent, a Treasury official said.

In the first 10 months of fiscal 2024, the U.S. deficit fell 6 percent to $1.517 trillion from $1.614 trillion in the same period in fiscal 2023. The government’s fiscal year ends on September 30.

Year-to-date receipts rose 11 percent to $4.085 trillion, while spending for the period rose 6 percent to $5.602 trillion, the Treasury said.