The budget deficit had been falling rapidly last fiscal year, but reversed and is now at about 5% of GDP and climbing, due to the rate hikes, defense spending, and various Congressional initiatives kicking in.
Seems more than enough to support strong enough growth to encourage the Saudis to raise oil prices and the Fed to raise rates:
US Fiscal Deficit Narrows to $88 Billion
The US deficit stood at $88 billion in October, the first month of the fiscal year 2023, much below the $165 billion shortfall reported in the comparable period of the previous fiscal year. Individual income taxes increased from $143 billion to $175 billion, while corporate income taxes were slightly down. Defense spending increased from $65 billion to $73 billion, while outlays to the Department of Health declined from $120 billion to $87 billion. Additionally, outlays to the Department of Veterans Affairs and the Small Business Administration declined from $34 billion to $20 billion and from $2.3 billion to $290 million. Finally, payment on interest on Treasury debt securities increased from $19 billion to $47 billion.
When adjusting for calendar-related differences — notably $62 billion in federal benefit payments moved up to September because October 1 landed on a Saturday — the October deficit totaled $149 billion. That figure is a $7 billion improvement from the adjusted $157 billion deficit in October 2021, Treasury data shows.
It is all about whether oil prices are heading higher.
I suspect they are:
No slowing here:
No sign of stress here: