Federal deficit grew 17% in fiscal 2018, to $779 billion

The federal deficit widened last year amid higher government spending—including rising interest costs on the debt and increased funding for the military—and flat revenues following last year’s tax cut.

The government ran a $779 billion deficit in the fiscal year that ended Sept. 30, the Treasury Department said Monday. That is the largest annual deficit in six years and 17% higher than the $666 billion deficit in fiscal 2017. As a share of gross domestic product, the deficit totaled 3.9%, up from 3.5% a year earlier and the third consecutive increase.

The deficit would have been even higher if not for shifts in the timing of certain payments, Treasury said.

Government receipts held steady at $3.3 trillion, despite strong economic growth and a robust labor market. The low unemployment rate, which hit 3.7% in September, coupled with rising wages would typically drive government tax revenue higher.