In the first 10 months of fiscal year 2024, the US budget deficit fell 6% to $1.517 trillion, from $1.614 trillion in the same period of fiscal year 2023. (Source: 123RF)

The US budget deficit in July 2024 increased 10% year-on-year to $244 billion, from $221 billion recorded in July 2023.

However, when accounting for calendar differences, the deficit fell by more than $45 billion, according to the Treasury Department.

The nominal increase was largely due to lower-than-normal benefit spending in July last year, particularly for Medicare, when payments are due in June 2023.

Taking these adjustments into account, the deficit in July 2024 would be 16% lower than in the same month in 2023.

US budget revenue in July was $330 billion, up 20% over the same period last year, while government spending increased 16% to $574 billion, led by a $72 billion increase in the Medicare program.

The cost of servicing federal debt also continued to rise, with interest payments on the debt rising 21% to $89 billion in July.

The weighted average interest rate on federal debt rose 49 basis points to 3.33% in July, its highest level since January 2010.

In the first 10 months of fiscal year 2024, the US budget deficit fell 6%, to $1.517 trillion, from $1.614 trillion in the same period of fiscal year 2023.

Meanwhile, revenue from the beginning of the year increased by 11% to $4.085 trillion, while spending in the same period increased by 6% to $5.602 trillion. The US fiscal year ends on September 30.

* According to the Survey of Consumer Expectations (SCE) report released by the Federal Reserve Bank of New York on August 12, US consumers' medium-term inflation expectations fell significantly in July 2024.

Average three-year inflation expectations fell to 2.3% in July 2024, the lowest since the New York Fed began conducting monthly SCEs in 2013, from 2.9% in June. One-year and five-year inflation outlooks remained steady at 3.0% and 2.8%, respectively.

Meanwhile, consumers, especially low-income households, see a higher likelihood of defaulting on their debt in the coming year. The survey found that the average probability of defaulting on minimum debt payments among US households was 13.3%, up 1 point from June and the highest since April 2020, when the Covid-19 pandemic caused unemployment to spike in a short period of time.

The increase was most pronounced among those with annual incomes below $50,000 and those without a high school diploma, the survey found.

The Fed has taken steps to monitor inflation expectations, concerned that if they start to rise significantly, consumers and businesses will change their spending behavior and make inflation harder to control.

According to recent economic data, inflation is gradually returning to the Fed's 2% target and the US central bank is now strongly expected to cut interest rates in September.

The Fed's policy interest rate has increased rapidly from near zero in March 2022 to 5.25% - 5.50% in July 2023 and has been maintained until now.