What is Budget Deficit?
The federal deficit is the shortfall in a given fiscal year when government outlays exceed receipts. It is financed by issuing new Treasury debt. The accumulated deficits across all years, minus any surpluses, equal the federal debt held by the public.
Live data: Federal Surplus or Deficit [-]
Federal Reserve Economic Data (FRED) — · Annual, Fiscal Year · 12 observations
Most recent observation: -1,774,684 Millions of Dollars as of September 30, 2025.
Understanding Budget Deficit
The federal deficit is the gap between what the government spends and what it collects in a fiscal year. The Treasury borrows by issuing securities to fill the gap; the accumulated deficits (minus surpluses) equal the national debt held by the public.
Deficits move with the economy and with policy. They widen automatically in recessions as tax receipts fall and safety-net spending rises (unemployment insurance, Medicaid, food assistance). They narrow in expansions as the opposite happens. Deliberate fiscal expansions — the 2017 tax cuts, the 2020 CARES Act, the 2021 American Rescue Plan — can widen deficits even in a strong economy.
Since 1970 the U.S. has run a surplus in only four years: 1998 through 2001. Every other year has added to the debt. The 2020 COVID-response deficit was the largest since World War II as a share of GDP.
How Budget Deficit is calculated
Deficit = federal outlays − federal receipts for a given fiscal year. The Treasury publishes monthly and fiscal-year-to-date figures in the Monthly Treasury Statement. CBO and OMB publish forward-looking projections that assume current law.
Historical context
The U.S. ran small surpluses in most of the 19th century outside of wartime. The 20th century's largest deficits came during World War II (peaking above 26% of GDP). Modern-era peaks were 2009 (about 10% of GDP during the financial crisis) and 2020 (about 15% of GDP during COVID).
Frequently asked questions
Is the deficit the same as the debt?
No. The deficit is a flow (one year's shortfall); the debt is the stock (accumulated deficits less surpluses from all prior years still outstanding). A deficit adds to the debt each year.
Why does the deficit grow in recessions?
Two reasons automatically: tax receipts fall as income and corporate profits drop, and safety-net spending rises as unemployment and enrollment in Medicaid, SNAP, and similar programs grow. These are called 'automatic stabilizers' — they expand the deficit precisely when stimulus is needed.