The Congressional Budget Office reported that the deficit totaled $1.993 trillion for the fiscal year ending Sept. 30, a 12% increase from the previous year and the largest annual shortfall since 2021. Federal spending climbed 6% to approximately $7.4 trillion, while revenue increased just 3% to roughly $5.4 trillion.

The deficit amounted to more than 6% of gross domestic product. The final fiscal-year GDP figure has not yet been released, but the ratio already places the shortfall at a level typically associated with wartime spending, deep recessions or major national emergencies.

The size of the gap is particularly notable because the United States remains in an economic expansion rather than facing a recession or a major crisis. Low unemployment and continued growth would normally be expected to support stronger revenue collection and more restrained spending. Instead, outlays rose faster than receipts, widening the imbalance.

Shai Akabas, vice president of economic policy at the Bipartisan Policy Center, warned that the current trajectory is unsustainable. “Running $2 trillion deficits in a growing economy with low unemployment and no major emergency situation going on is an unsustainable trend,” he said.

The consequences extend well beyond a single budget year. When the federal government spends more than it collects in taxes and other revenue, it borrows to cover the difference. Those annual shortfalls accumulate into the national debt. As the debt grows, the amount of interest taxpayers must finance each year also rises, consuming a larger share of future budgets and limiting flexibility for other priorities.

The latest figures show that even during a period of relative economic stability, federal spending continues to outpace revenue by a wide margin. With the deficit approaching $2 trillion and measuring more than 6% of GDP, the data underscore the challenge of bringing long-term fiscal accounts into balance without significant changes to either spending levels or revenue collection