U.S. Budget Deficit falls in May, Tariffs explaining over half of the narrowing
May saw a budget deficit of $316bn, down from $347.1bn in May 2024, though the deficit in the fiscal year to date of $1364.7bn is up from $1202.3bn in the eight months to May 2024. The 12-month average has however slipped below $2trillion for the first time in the current fiscal year. The deficit in FY 2024 was $1.832 trillion.
Receipts saw a strong month, up 14.7% versus 5.9% in the fiscal year to date. Customs duties were up by $16.9bn from May 2024 to $22.2bn, meaning increased customs duties explained 54% of the yr/yr decline in the deficit. Sustaining such a rise in customs duties over 12 months would reduce the annual deficit by around $200bn, or by around 10%. Spending was up a modest 2.5% yr/yr in May, well below a 7.9% rise in the fiscal year to date.
