CBO says the federal deficit reached $2.0 trillion in fiscal 2026 and $409 billion in October alone

The federal budget deficit totaled $2.0 trillion in fiscal year 2026, which ended on September 30, the Congressional Budget Office said¹. That was an increase of $217 billion, or 12 percent, from the deficit recorded in the previous year, according to CBO¹.

CBO released the figures on Monday². According to its report, revenues rose by 169 billion dollars and outlays by 386 billion dollars².

The new fiscal year started with a larger gap. CBO reported an October 2026 deficit of $409 billion⁴, which was $125 billion more than the shortfall recorded last October⁴. The deficit topped $400 billion in the first month of the new fiscal year⁵.

Why it matters to investors

The figures are CBO’s estimates and show spending outpacing revenue. In CBO’s numbers, outlays grew by 386 billion dollars over the year while revenues grew by 169 billion dollars², which accounts for the wider deficit¹.

The gap is widening at the start of the new fiscal year rather than narrowing: October’s deficit of $409 billion was $125 billion larger than a year earlier^4,5.

The arithmetic is direct. The 386 billion dollar rise in outlays exceeded the 169 billion dollar rise in revenues by $217 billion², the same amount by which CBO says the deficit grew from the previous year¹. For bond investors, the size of the shortfall, $2.0 trillion for the year¹, is the starting point for gauging how much the Treasury must borrow.

What to watch

CBO said that early in the next calendar year it will publish updated budget information³, which will add context beyond these monthly figures. CBO noted in its review that it also measures the 2026 deficit as a share of GDP³.

Monthly data will also show whether October’s pattern holds. A first-month deficit that topped $400 billion⁵ sets a high starting point for the new fiscal year, and the $125 billion year-on-year increase in October⁴ is the first data point on whether spending growth is still running ahead of revenue.

The balance between revenues and outlays is the key variable. In fiscal 2026, outlays grew more than twice as fast in dollar terms as revenues, 386 billion dollars against 169 billion dollars², and whether that gap narrows will determine the trend in the deficit CBO reports¹.