The U.S. Department of the Treasury building is seen in Washington, D.C., Jan. 19, 2023.
Saul Loeb | Afp | Getty Images
The U.S. government drifted further into red ink during May, with a burgeoning debt and deficit issue getting worse, the Treasury Department reported Wednesday.
After running a short-lived surplus in April thanks to tax season receipts, the deficit totaled just over $316 billion for the month, taking the year-to-date total to $1.36 trillion.
The annual tally was 14% higher than a year ago, though the May 2025 total was 9% less than the May 2024 shortfall.
Surging financing costs were again a major contributor to fiscal issues, with interest on the $36.2 trillion debt topping $92 billion. Interest expenses on net exceeded all other outlays except for Medicare and Social Security. Debt financing is expected to run above $1.2 trillion for this fiscal year, totaling $776 billion through the first eight months of the fiscal year.
Tax revenue has not been the problem. Receipts rose 15% in May and are up 6% from a year ago. Expenditures increased 2% monthly and are up 8% from a year ago.
Tariff collections also helped offset some of the shortfall. Customs duties for the month totaled $22.2 billion, up from $15.6 billion in April. For the year, tariff collections have totaled $81.4 billion, up 65% from the same period in 2024 and already surpassing the full-year estimate for $63.3 billion.
However, yields have held higher — after dipping last summer into September, they turned up in direct opposition to Federal Reserve rate cuts, eased in the early part of the year, then moved higher again following President Donald Trump’s April 2 “liberation day” tariff announcement. The 10-year Treasury yield is virtually unchanged from a year ago around 4.4%.
In recent weeks, Wall Street leaders including JPMorgan Chase CEO Jamie Dimon, BlackRock CEO Larry Fink and Bridgewater Associates’ Ray Dalio have warned of turmoil that could come from the onerous debt burden. The deficit is currently running more than 6% of gross domestic product, virtually unheard of in peacetime U.S. economies.