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Economic Viewpoint

Improvement or Illusion? A Closer Look at the US Federal Government’s Fiscal Position

May 7, 2026
Francis Généreux
Lead Economist

The US government’s fiscal position has started looking somewhat stronger over the past year, but this improvement merits further scrutiny. The recent reduction in the deficit was mainly caused by temporary factors like tariffs and drastic cuts to certain government programs. The lagged effects of tax cuts, upward pressure on military spending and geopolitical uncertainty could quickly cut short any decline in the deficit. This Economic Viewpoint reviews the state of the US federal government’s finances, the budgetary impacts of the Trump administration’s key policies and the risks threatening this apparent improvement.

NOTE TO READERS: The letters k, M and B are used in texts, graphs and tables to refer to thousands, millions and billions respectively. IMPORTANT: This document is based on public information and may under no circumstances be used or construed as a commitment by Desjardins Group. While the information provided has been determined on the basis of data obtained from sources that are deemed to be reliable, Desjardins Group in no way warrants that the information is accurate or complete. The document is provided solely for information purposes and does not constitute an offer or solicitation for purchase or sale. Desjardins Group takes no responsibility for the consequences of any decision whatsoever made on the basis of the data contained herein and does not hereby undertake to provide any advice, notably in the area of investment services. Data on prices and margins is provided for information purposes and may be modified at any time based on such factors as market conditions. The past performances and projections expressed herein are no guarantee of future performance. Unless otherwise indicated, the opinions and forecasts contained herein are those of the document’s authors and do not represent the opinions of any other person or the official position of Desjardins Group.