US Deficit Soars

The US deficit is surging despite low unemployment. The cumulative US fiscal deficit since 2020 has surged to a massive $14.18 trillion. Meanwhile, the 7-year average unemployment rate has fallen -0.4 percentage points, to 4.7% over the same period. In the first 11 months of FY2026 alone, the US deficit totaled $1.97 trillion, the 3rd-largest for this period of the year in history. When the economy is strong and unemployment is low, the government would typically keep fiscal deficits lower, reserving large-scale fiscal support for periods of economic weakness. This time, however, the deficit is running at historically high levels despite stable unemployment. This comes as elevated government spending and rising interest costs are keeping the deficit exceptionally large even without a recession. Massive deficits have become a permanent feature of the US economy.