U.S. July budget deficit jumps 48% to $432B, highest since 2021

The U.S. budget deficit widened to $432.3 billion in July, the largest monthly shortfall since March 2021, Treasury data showed Wednesday. The deficit rose 48% from a year earlier.

Medicare spending totaled $174 billion in July, up from $103 billion in June. Social Security outlays were $141 billion, and net interest on the national debt cost $104 billion. Medicare costs for the fiscal year to date stand at $955 billion, the largest single expenditure.

For the first 10 months of the fiscal year, the deficit has reached nearly $1.8 trillion, surpassing the same period in 2025. Net interest on the debt has totaled $931 billion so far, and total debt financing for the year is $1.17 trillion, up $157 billion from a year ago. The national debt stands at $39.9 trillion, with $32.1 trillion held by the public.

The budget also absorbed a $99 billion hit from a calendar effect: the first of the month fell on a nonbusiness day, accelerating outlays for Supplemental Security Income and Medicare. Tariff refunds cost the budget $33 billion as the administration continues to provide rebates for levies the Supreme Court ruled illegal.

President Donald Trump has pressed the Federal Reserve to lower rates to reduce debt costs. He has not criticized the central bank since his nominee Kevin Warsh took over as chairman in May. Recent benign inflation data and a soft payroll report have tempered expectations for rate increases. Futures traders still see no chance of a rate cut in the next five years.