The U.S. budget deficit hit its highest level since March 2021 in July. That's the headline. The federal government spent more money than it collected. Again. For the tenth consecutive month. The collective shortfall now sits at $1.8 trillion.
March 2021 was when the government was still sending checks to people for sitting at home. That was the benchmark we just cleared. We needed a pandemic to hit that number last time. This time we did it on a random Tuesday in summer.
The fiscal year runs through September. Two months left. Someone at Treasury is probably running the numbers right now, trying to figure out if they can squeeze in another record before the clock runs out. Bold strategy.
Retail traders saw this news and immediately started panic-buying SPY calls because deficits mean the money printer goes brrrr or whatever brain-dead logic they learned from a YouTube video with a thumbnail of a guy pointing at a chart. They think more government debt means stocks only go up. They have confused a central bank balance sheet with a national budget. They will lose money and blame Jerome Powell.
The report noted this exceeds the same period in 2025. That's last year. We're spending more and collecting less than we did twelve months ago. Progress.
Somewhere a Keynesian economist is writing a thread explaining why this is actually good. Somewhere else a libertarian is screaming into a podcast microphone that he called this in 2003. Neither will change a single vote. The deficit will expand. Congress will furrow their brows. The Treasury will auction more bonds. China will buy some. Pension funds will buy the rest.
And your neighbor who just discovered options trading will somehow find a way to lose money in both directions while the government racks up another trillion before Halloween.
Photo by Marek Studzinski on Unsplash
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