US December Budget Deficit Soars to $145 Billion, Hits Record High

Mounting Fiscal Pressure: US Monthly Deficit Hits New Peak

The US Treasury reported a federal budget deficit of $145 billion in December 2025, a 67% year-over-year surge and the highest December figure on record, signaling growing fiscal strain.

Key Drivers Behind the Surge

Two primary factors contributed to the sharp increase:

• Government spending hit an all-time monthly high, fueled by expanded outlays on public programs;
• A timing shift in the disbursement of key benefit payments, including Social Security and Medicare, led to earlier accounting recognition.

While largely a technical adjustment, the change significantly impacted the monthly deficit tally.

Market and Policy Implications

Treasury yields edged higher following the release. Analysts warn that persistent deficits could erode fiscal flexibility in future downturns, urging structural reforms and more disciplined budgeting practices.