US fiscal deficit surged to $14.18 trillion since 2020 while unemployment remains low at 4.7%, signaling structural budget pressures that could drive inflation and weaken the dollar.
Macro & Markets ·
The cumulative US fiscal deficit has reached $14.18 trillion since 2020 while the 7-year average unemployment rate stands at 4.7%, presenting an unusual economic dynamic where large-scale fiscal deficits persist despite stable labor market conditions. In the first 11 months of fiscal 2026, the deficit totaled $1.97 trillion, marking the third-largest figure for this period in history. Government spending and rising interest costs are sustaining exceptionally large deficits even without economic weakness, a departure from the typical pattern of reserve large-scale fiscal support for recessions.