Tariffs are now bringing in nearly $20B per month—about $240B annually—but spending is rising far faster. July U.S. federal government spending jumped to $630B, up almost 10% YoY, while revenues gained just 2.5%. The result was a $291B deficit, the second-worst July on record and a reversal from June’s brief surplus. Year-to-date, the deficit has already hit $1.63T, putting 2025 on pace to be the third-worst fiscal year in U.S. history.
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The burden of debt service is accelerating even faster: the U.S. paid $92B in July interest alone, pushing the year-to-date total over $1T—already larger than defense spending. With debt costs set to exceed $1.2T this year, fiscal pressures are reinforcing inflation just as PPI, core CPI, and electricity costs reheat.

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