Happy fiscal New Year

Wells Fargo Research Team Wells Fargo

Summary

Another federal fiscal year is in the books. Today marks the first day of FY 2025, and the new year is a time for reflecting upon the past year and looking ahead to the new one. With the 2024 presidential election just one month away, the U.S. fiscal policy outlook is sharply in focus. In this report, we have selected some of our favorite charts on U.S. fiscal policy and paired them with a short blurb highlighting some key trends in the finances of the federal government. We hope you find them informative and have a wonderful fiscal new year.

Where did spending growth come from in FY 2024?

Federal spending increased by $392 billion (+7%) through the 11 months of FY 2024 for which we have data. Outlay growth outpaced nominal GDP growth despite the latter being on track to grow by a very solid 5.5% in FY 2024. Yet, just a handful of spending categories have accounted for the entirety of the year's outlay growth. Interest spending on the national debt jumped by $227 billion, while spending on Social Security and health insurance for the elderly (Medicare) accounted for a combined $174 billion increase in expenditures. Spending on national defense (+$52 billion) and veterans (+$40 billion) also saw meaningful growth this fiscal year. But, beyond those categories, federal outlays on all remaining programs declined by roughly $100 billion.

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Wells Fargo Research Team

Wells Fargo

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