The Deficit is Shrinking, But There’s a Catch: Tariffs are Doing the Heavy Lifting 📉📦
The numbers for the start of Fiscal Year 2026 are in, and they tell a story of a massive shift in how the U.S. government is filling its coffers. While the U.S. budget deficit remains at historically high levels, we are seeing the first significant "dent" in years. $SPACE
Here is the breakdown of the Treasury’s latest report:
The Big Picture: By the Numbers
For the first four months of FY2026 (Oct–Jan), the fiscal landscape has shifted dramatically:
The Deficit: Fell to $697 Billion—a 17% drop compared to the same period last year.
January Snapshot: The monthly deficit plummeted 26% YoY to $95 billion.
Revenue Surge: Total government receipts hit $1.8 Trillion, up 12%.
Spending Check: Government outlays rose a modest 2%, reaching $2.5 Trillion. $SPX
The "Tariff Effect" 🚢
The most striking figure in this report isn't income tax—it's Customs Duties.
Tariff revenues have surged an incredible 304% YoY, bringing in $124 Billion in just four months. To put that in perspective, this single revenue stream is now significantly outperforming Corporate Income Taxes ($112 Billion) as a source of federal funding.
While individual income taxes ($924 Billion) remain the primary engine, the sudden influx of trade-related revenue is the primary reason the deficit isn't even wider.
The Reality Check: 3rd-Worst Start in History ⚠️
Despite the -17% improvement, we aren't out of the woods. This still represents the 3rd-worst start to a fiscal year in U.S. history. $BEAT
The "Big Three" expenses continue to dominate the budget, making it difficult to achieve a surplus:
Social Security: $540 Billion
Medicare: $403 Billion
Net Interest: $346 Billion (Interest on our debt is now costing more than National Defense).
#USBudgetCrisis #TariffWarning #TrumpCanadaTariffsOverturned