US deficit reaches $1.8 trillion in first 10 months of fiscal 2026

The US federal budget deficit has reached $1.8 trillion in the first 10 months of fiscal 2026, a significant increase from previous years. This surge is largely due to higher government spending and lower revenues from tariffs. The large deficit is a concern for the economy as it can lead to increased borrowing and higher interest rates, potentially impacting economic growth and inflation.

Why it matters

The record US deficit could lead to increased borrowing costs and higher interest rates. This could reduce investor demand for US bonds and increase their yields.

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