The United States Treasury confirmed Wednesday that the federal budget deficit for May hit $316 billion, placing it among the top three largest monthly gaps ever recorded.
This comes right after April’s short-lived surplus, which was only made possible by a wave of tax payments that couldn’t hold off the spending flood.
So far in the 2025 fiscal year, the total shortfall has reached $1.36 trillion, which is 14% higher than where the books stood this time last year. The data was released by the Department of the Treasury, according to their latest report.
But May’s numbers were still 9% smaller than May 2024’s, a minor drop that doesn’t mean much when costs keep rising. A major part of the pressure is interest payments, which have gotten out of hand. With total U.S. debt sitting at $36.2 trillion, the government had to spend $92 billion just on interest in May.
That number beat every other federal expense except for Medicare and Social Security, and it’s still climbing. In just eight months of fiscal 2025, $776 billion has been spent on debt interest alone. By the time the fiscal year wraps, that figure is expected to pass $1.2 trillion.
Budget pressures persist as Trump’s tariff move fuels yield
On the surface, the U.S. isn’t facing a revenue problem. Tax receipts rose 15% in May, and they’re 6% higher than they were a year ago. But spending went up too, by 2% on the month, and 8% on the year. Even tariffs helped: the government collected $23 billion from customs duties in May, jumping from just $6 billion a year earlier.
Over the year, tariffs have pulled in $86 billion, a 59% increase. Still not enough.
One reason things are tight is because yields are still high. After sliding last summer, they began rising again, even with the Federal Reserve cutting rates. Then came President Donald Trump’s “liberation day” tariff announcement on April 2, which pushed yields higher again. The 10-year Treasury yield now sits at about 4.4%, nearly flat from last year but still painfully high when you’re borrowing trillions.
Warnings are also coming from Wall Street. Jamie Dimon, CEO of JPMorgan Chase, Larry Fink, who runs BlackRock, and Ray Dalio, founder of Bridgewater Associates, have all raised concerns in recent weeks about the risks of piling debt. The deficit now makes up more than 6% of U.S. GDP, a figure almost never seen outside of wartime.
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