By Kate Davidson 

WASHINGTON -- The U.S. budget gap grew 34% in the first month of the fiscal year as federal spending outpaced revenue growth, pushing the 12-month deficit past $1 trillion for the first time since February 2013.

The government ran a $134 billion budget deficit in October, the Treasury Department said Wednesday. Federal outlays totaled $380 billion, an 8% increase from a year earlier and a record for the month, driven by higher spending on the military, health care and Social Security.

Receipts last month totaled $246 billion, a 3% decline from last year, which the Treasury attributed in large part to a shift in the timing of certain payments.

If not for those calendar quirks, revenue would have grown 2% in October from a year earlier, and the deficit would have widened 19% in the first month of fiscal year 2020, the Treasury said.

Over the past 12 months, the government collected $3.4 trillion in revenue and spent $4.4 trillion, bringing the total deficit to just over $1 trillion, or 4.8% of gross domestic product.

After briefly eclipsing $1 trillion in August, the U.S. budget deficit came in just shy of $1 trillion for the 2019 fiscal year, which ended Sept. 30, thanks to a late surge in corporate tax revenue. Annual deficits have been climbing since 2016, despite a period of low unemployment and sturdy economic growth, as tax cuts enacted in 2017 weighed on federal revenue collection and a bipartisan budget deal boosted federal spending levels.

Last year marked the fourth year in a row that budget deficits have widened, the longest stretch of deficit growth since the early 1980s, when the unemployment rate was near 11%. Deficits usually shrink during economic expansions as rising household income and corporate profits boost revenue, while spending for safety-net programs, such as unemployment insurance or food stamps, declines.

Revenue from customs duties, or tariffs, increased 39% to $2 billion last month, reflecting the higher tariffs the Trump administration has imposed in recent months. That was offset by a decline in excise taxes, which a senior Treasury official attributed part to a moratorium on a fee the government collects from health-care providers under the Affordable Care Act.

Spending on the military and on the Department of Health and Human Services -- including Medicare and Medicaid spending -- rose 8% in October. Interest payments on the debt, one of the fastest-growing parts of the federal budget, declined 4% last month from a year earlier, reflecting falling borrowing costs as the Federal Reserve cut interest rates, a Treasury official said.

The government typically runs a deficit in October, which includes no major tax payment deadlines for individuals or corporations.

More broadly, the government is projected to continue running trillion-dollar deficits over the coming decade, as a wave of retirees pushes up mandatory spending on Social Security and Medicare.

Write to Kate Davidson at kate.davidson@wsj.com

(END) Dow Jones Newswires

November 13, 2019 14:59 ET (19:59 GMT)

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