The U.S. Treasury has officially reported a significant win for the federal balance sheet. In January 2026, the monthly budget deficit dropped to $95 billion—a massive 26% decrease ($34 billion) compared to the same time last year.
Thank you for reading this post, don't forget to subscribe!The Winning Formula: Revenue Up, Spending Down
The fiscal improvement is being driven by two main factors:
- Revenue Surge: Total receipts hit $560 billion (up 9%).
- Controlled Spending: Outlays only grew by 2%, showing a tighter grip on the budget.
The Tariff Impact
A major catalyst for this revenue jump is the sharp increase in Customs Duties. Thanks to the current administration’s tariff policies, customs revenue soared to $27.7 billion in January—nearly quadrupling the $7.3 billion collected in the pre-tariff era.
The Big Picture (FY2026)
The momentum isn’t just a one-month fluke. Through the first four months of Fiscal Year 2026, the cumulative deficit is down 17%, sitting at $697 billion (compared to $840 billion last year).
The Bottom Line: With record-breaking customs revenue and smarter fiscal management, the U.S. is seeing a dramatic reduction in the deficit for the first third of the fiscal year.
