The Treasury Department’s monthly budget report released Tuesday showed that the fiscal year-to-date deficit had reached $1.63 trillion.
The U.S. budget deficit widened in July despite President Donald Trump’s tariffs jumping nearly 275% year over year to a record high, drawing sharp criticism from economist Peter Schiff on Tuesday.
On X, Schiff, a gold bull, said, “The U.S. July budget deficit shot up 20% year-over-year to $291 billion, despite record tariff revenue. He noted that this was the second-largest July deficit on record, after the $302 billion deficit recorded for July 2021.
The 2021 July deficit, however, included massive COVID-19-related stimulus spending, he added.
Schiff also refuted Trump’s claim of a booming economy. “Trump claims the U.S. economy is booming. But a booming economy results in lower, not higher, deficits,” he said, adding that deficits rise when the economy is weak.
“The truth is the U.S. economy is cooling fast, so deficits will keep rising and be much higher during the next official recession,” he added.
The economist also shrugged off the record stock market performance. “Trump claimed that under Biden, the U.S. had the worst economy in history. Yet the stock market repeatedly hit new record highs.”
“So Trump can’t use a record-high stock market to claim the economy is booming now.”
While launching an attack on Goldman Sachs CEO David Solomon on Truth Social Tuesday morning, Trump said, “Trillions of Dollars are being taken in on Tariffs, which has been incredible for our Country, its Stock Market, its General Wealth, and just about everything else.”
He also claimed that tariffs haven’t caused inflation and that much of the tariff costs are absorbed by “Companies and Governments, many of them Foreign.”
On Tuesday, after the July consumer price inflation print came in tamer than expected, the S&P 500 Index broke above the 6,400 barrier for the first time ever and closed at a record high. The tech-heavy Nasdaq Composite and Nasdaq 100 Indices also hit new peaks.
The Invesco QQQ Trust (QQQ), an exchange-traded fund (ETF) that tracks the Nasdaq 100 Index, and the SPDR S&P 500 ETF (SPY) are up 13.76% and 10.31%, respectively, for the year.
The QQQ and SPY ETFs were among the top 10 active equity tickers on Stocktwits late Tuesday, with sentiment toward the former at ‘bullish’ and that toward the latter at ‘neutral.’
The Treasury Department’s monthly budget report released Tuesday showed that the deficit for the month was $291.14 billion, taking the fiscal year-to-date deficit to $1.63 trillion. The fiscal year of the U.S. government starts in October.
According to a Bloomberg report, a Treasury Department spokesperson told reporters on a call that the fiscal YTD deficit would have been 4% narrower than last year, after adjusting for differences in the calendar and removing the impact of deferred tax payments received in 2024.
Customs revenue came in at $27.67 billion for July and $135.69 billion for the fiscal YTD period, more than doubling from the $62.74 billion received a year earlier.
The tariff scenario remains unclear, as some trading partners, including China, have yet to sign bilateral deals. China had recently received a 90-day extension. Trump’s “One Big, Beautiful” tax bill is seen as inflationary by economists, posting risks to the fiscal situation.
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