US federal deficit widened to $1.99 trillion in FY2026, with interest costs now the third-largest government expense after Social Security and Medicare.
Macro & Markets ·
The US federal deficit reached $1.99 trillion in FY2026, a 12 percent increase from $1.78 trillion the prior year, as government spending rose 6 percent to $7.4 trillion. Net interest costs surpassed $1 trillion, making debt servicing the third-largest government expense after Social Security and Medicare. This marks the fourth consecutive year the deficit has remained around $2 trillion.