The numbers: The U.S. federal budget deficit widened to $219.6 billion in August, up from $170.6 billion in the same month last year, the Treasury Department said Tuesday.
For the first eleven months of the fiscal year, the deficit narrowed sharply to $946 billion from $1.77 trillion in the same period last year, as pandemic expenses have eased.
Key details: For the first eleven months of the 2022 fiscal year, which ends Sept. 30, receipts were up 23% while outlays fell 15%.
In August, receipts were up 13% while outlays were down 19%.
Interest on the federal debt totaled $88 billion in August, up from $58 billion in the same month last year. For the year to date, the interest on the federal debt rose 29% to $678 billion. Interest on the debt is expected to continue to rise as the Federal Reserve raises interest rate to combat high inflation.
Calendar adjustments played a large role in the monthly deficit data.
With August 1 landing on a weekend in 2021, benefit payments were accelerated to July. Without the calendar adjustments, the deficit last month was virtually flat compared with August 2021.
Big picture: According to the Congressional Budget Office, the outlook for the annual deficit remains uncertain, even though there is only one month left in the fiscal year. That’s because of uncertainty over the timing and amounts of the changes to student loan programs in the wake of the debt relief plan announced late last month by President Joe Biden. Without the changes to student loans, the annual 2022 budget deficit could be about $1 trillion, compared with a $2.8 trillion shortfall last year, CBO said.
Market reaction: The yield on the 10-year Treasury note
rose 7 basis points to 3.43% after the upside surprise to the August consumer price inflation data.