U.S. Budget Deficit Surges to $367 Billion in November on Calendar Payment Shifts

The U.S. budget deficit surged to $367 billion in November 2024, a 21% increase from the previous year, primarily due to calendar shifts in government payments. This significant jump in the deficit highlights the importance of understanding the timing of government outlays and revenues in assessing the fiscal health of the nation.

The U.S. government's fiscal year runs from October 1 to September 30. However, when the first day of the fiscal year falls on a weekend, certain payments are shifted to the preceding month. This shift in payment timing can significantly impact the monthly budget deficit. In November 2024, payments initially planned for December 1, a Saturday, were made in November, inflating the deficit. Similarly, in October 2023, payments scheduled for October 1, a Sunday, were made in September, reducing the deficit. This timing effect is significant, as it can swing the deficit by billions of dollars.

Postponed tax payments, like those due to natural disasters or calendar shifts, can also impact government revenue collection throughout the year. In 2024, the Congressional Budget Office (CBO) estimated that postponed payments from taxpayers in disaster areas boosted receipts by about $70 billion. This shift in timing can lead to a higher-than-expected revenue in the months when these payments are made, as seen in November 2024, where the U.S. budget deficit jumped to $367 billion due to calendar payment shifts. However, this also means that revenue may be lower in the months when these payments would have originally been due.

The estimated effect of postponed tax payments on the annual budget deficit varies across different fiscal years. In 2023, the IRS postponed some 2023 filing deadlines for taxpayers in disaster areas, leading to a $8.5 billion adjustment in fuel tax refunds and credits. This adjustment reduced the deficit in 2023 but increased it in 2024. Therefore, the net effect of postponed tax payments on the annual budget deficit is complex and depends on the specific circumstances of each fiscal year.

Understanding the impact of calendar shifts and postponed tax payments on the budget deficit is crucial for policymakers and investors alike. As the U.S. government continues to grapple with a growing national debt, it is essential to consider the timing of outlays and revenues when evaluating the fiscal health of the nation. By doing so, investors can make more informed decisions about the future of the U.S. economy and the potential impact on their portfolios.