The federal deficit for the first two months of the new budget year is piling up faster than last year's record imbalance.

Economists worry the flood of red ink could push interest rates higher and raise the cost of borrowing for consumers and businesses, a potential drag on the fragile economic recovery.

The November deficit totaled $120.3 billion, the Treasury Department said Thursday. That's less than analysts had expected and down from a $176.4 billion imbalance in October. It was a record 14th straight monthly deficit.

Even with the improvement, the deficit is 5.7 percent higher than the first two months of the 2009 budget year when it hit a record $1.42 trillion. The Obama administration expects the 2010 deficit will set a new record at $1.5 trillion.

In a sign of the recession's depth, the government said individual income tax collections totaled $63.9 billion in November, less than the $70.5 billion the government collected in Social Security taxes and taxes for Medicare and disability insurance programs.

Analysts said it is not unusual for individual income taxes to fall sharply during a recession because the volatile category not only reflects the number of people working, but also bonuses and individual investment earnings that plunged during the downturn.

The amount of revenues that reflect Social Security and Medicare taxes, while down because fewer people are working than a year ago, are not subject to such large swings.

The flood of red ink reflects the downturn's effect the government's books. Both individual and corporate tax receipts have been cut sharply, while government spending on unemployment benefits, food stamps and other programs surged.

In addition, the deficit reflects heavy spending from the $700 billion financial bailout fund to stabilize the financial system, and the $787 billion economic stimulus program to jump-start growth and prevent the Great Recession from turning into another Great Depression.

For October and November, government receipts totaled $268.9 billion, down 13.1 percent from the same two months a year ago. Government outlays over the past two months totaled $565.6 billion, a drop of 4.2 percent from the year-ago period.

Spending to shore up the financial system was much lower over the past two months compared with a year ago, but the administration still projects that for the entire year, total government outlays will be 3 percent higher.