The latest data released by the U.S. Treasury on Wednesday showed that the government spent $584.2 billion in November (the second month of the 2025 fiscal year), an increase of 14% compared to the previous year, setting a record high for the same period.
On a six-month moving average basis, U.S. government spending reached $586 billion, nearly at a historical high, second only to the crazy spending period during the COVID-19 pandemic.
The surge in spending is mainly due to increased expenditures in health, defense, and social security, with Medicare spending soaring by $50 billion.
In contrast, U.S. government tax revenues only saw a moderate increase of $301.8 billion, a 9.8% rise from $274.8 billion in November last year. As shown in the chart below, the six-month average of tax revenues remains at $380 billion, unchanged from three years ago.
Excluding the interference of calendar effects, the fiscal deficit problem of the U.S. government is more serious. After deducting exceptional surpluses, the fiscal deficit for the U.S. in October and November reached an astonishing $624.2 billion, a staggering 64% increase compared to the same period last year, setting a historical record for the deficit in the first two months of the fiscal year (even including the crazy spending during the COVID-19 pandemic).
In other words, from a deficit perspective, the budget deficit in the first two months of the 2025 fiscal year is the worst start to a new fiscal year on record for the U.S. Treasury.
A more alarming detail is that the Treasury's debt service costs rose again in November. Total interest payments amounted to $87 billion, an increase of $7 billion from $80 billion in the same period last year.
By recent standards, the interest payments in November still seem to be at a low level, but considering that most interest payments are concentrated in December, next month’s interest payments are expected to exceed $150 billion.
Interest payments have become the second largest expenditure for the U.S. government, nearing $1.2 trillion, and may continue to rise, especially as the Federal Reserve ends its easing cycle prematurely due to inflation triggered by rising prices.
The good news is that for now, the surge in U.S. interest payments has been delayed. The weighted average interest rate of outstanding debt at the end of November was 3.36%, about a 15-year high, but slightly decreased compared to the previous month, marking a third consecutive month of decline.
However, do not expect the decline in interest payment rates to continue, as despite the Federal Reserve having cut rates twice since September, this has been offset by the surge in debt. The total U.S. debt has reached $36.2 trillion, an increase of $5 trillion from a month ago. Unless the government efficiency department led by Musk (DOGE) manages to cut trillions in spending and interest somehow, U.S. debt will only soar in the coming years, with interest payments on this debt soon becoming the largest single expenditure category for the U.S. government.
It is worth noting that most of the U.S. government's spending is concentrated in areas that are destined to become politically turbulent; in other words, any cuts could provoke backlash.
Article reposted from: Jinshi Data