The U.S. budget deficit hit $176.4 billion in October, the Treasury Department reported Thursday.

It was a record for the month of October, and higher than the $150 billion overdraft economists expected.

U.S. personal and corporate income tax revenue fell as the recession cost jobs in the construction and other industries. (Gerry Broome/Associated Press)

The announcement came on the heels of data for the 2009 budget year, which ended Sept. 30, showing U.S. federal government spending outstripped revenues by a record — in dollar terms — of $1.42 trillion. That was $958 billion above the deficit for 2008, the previous record.

Economists worry that the borrowing needed for such spending will push up interest rates, threatening the fragile economic recovery.

The deficit has grown for 13 straight months, another record.

Income tax revenues fall

Personal and corporate tax revenues as incomes fell because of the recession. Receipts were $135.3 billion, a 17.9 per cent drop from last October, but spending also fell, by 2.7 per cent, to $311.7 billion.

Last October's outlays were inflated by the $33 billion spent on the first round of financial bailouts at the peak of the financial crisis.

The Obama administration expects this year's deficit to reach $1.5 trillion. That would make it the third straight record annual deficit.

In relation to the overall economy, the 2009 U.S. deficit was 9.9 per cent of the gross domestic product. That was the highest level since the World War II-era deficit hit 21.5 per cent of GDP in 1945.

(With files from The Associated Press)