WASHINGTON, D.C. / RankWire.AI / – In the United States, the total gross national debt reached a new record exceeding $40 trillion on August 18, according to U.S. Treasury data. By August 27, this figure had grown to approximately $40.078 trillion. Of this total, about $32.314 trillion is debt held by the public, with government-held debt making up roughly $7.764 trillion.
This significant milestone occurred less than five months after the federal debt surpassed $39 trillion in March. In August 2016, the gross national debt was near $19.5 trillion, roughly half of the current amount. The increase in debt stems from federal spending surpassing income, which the government finances mainly through issuing Treasury bills, notes, and bonds to investors and government accounts.
Persistent budget deficits continue to put pressure on federal finances. The Congressional Budget Office reported a deficit of $1.8 trillion for the first 10 months of fiscal 2026, which exceeds the same period in fiscal 2025 by $169 billion. While revenue grew by $139 billion (3%), federal expenditures increased by $308 billion (5%). The agency projects the full-year deficit to reach approximately $2.1 trillion.
Interest payments on debt top $1 trillion
Interest costs are now accounting for a larger portion of the federal budget. In fiscal 2026, net interest expenses are expected to surpass $1 trillion, up from about $970 billion in 2025. This amount represents approximately 3.3% of the U.S. gross domestic product. Projections indicate that by 2036, annual net interest costs could reach $2.1 trillion, equating to roughly 4.6% of GDP.
The portion of debt held by the public has also increased relative to the country’s economic size. Current estimates place this measure at about 101% of GDP in 2026 and project it to rise to 120% by 2036. The previous historical peak was 106% in 1946, following World War II. Under these projections, publicly held debt could approach $56 trillion, while gross federal debt might near $64 trillion by 2036.
Debt levels influence borrowing costs and economic growth
The substantial federal borrowing also impacts financial conditions across the economy. The Congressional Budget Office has found that rising government debt can push interest rates higher and dampen private investment over time. This, in turn, can limit business expansion and productivity improvements, potentially affecting worker wages and household income. Consumer borrowing rates for mortgages, auto loans, and other credit are influenced by broader interest rate trends and market conditions.
While gross national debt and the federal deficit are related measures of fiscal health, they reflect different aspects of government finance. The debt represents the total accumulated obligations, whereas the deficit indicates the annual shortfall between government spending and revenue. Both figures remain elevated in fiscal 2026: gross debt exceeds $40 trillion, and the estimated annual deficit is $2.1 trillion, about 5.8% of GDP. This contrasts with a 50-year average deficit of approximately 3.8%.