US National Debt Surpasses $40 Trillion for the First Time: Five Key Figures
Economy
The US national debt has surpassed $40 trillion for the first time in history, increasing by roughly $1 trillion in less than five months. The record level of indebtedness comes amid persistent budget deficits, rising debt-servicing costs and higher yields on US government bonds.
According to the US Treasury Department, the $40 trillion threshold was reached in August 2026. The previous milestone of $39 trillion was reached in March, highlighting the acceleration in the pace of debt accumulation.
Debt exceeds the size of the economy
In nominal terms, the US has the largest government debt in the world. However, the absolute figure alone does not fully capture the country’s debt burden. A more meaningful measure is the ratio of government debt to gross domestic product.
According to an International Monetary Fund estimate, US general government gross debt is expected to reach $40.7 trillion in 2026, compared with nominal GDP of $32.4 trillion. That would put government debt at 125.8% of GDP.
For comparison, the ratio stood at 103.7% in 2012, indicating that government debt has grown faster than the US economy over the period.
The current debt level reflects decades of accumulated budget deficits. Wars, economic recessions and large-scale government spending during the COVID-19 pandemic contributed to sharp increases in federal borrowing.
More than $1 trillion spent on interest
One of the main consequences of rising debt is the growing cost of servicing it.
Net interest payments by the federal government are estimated at around $1.04 trillion in fiscal 2026. Debt-servicing costs have therefore become comparable to the largest categories of federal spending and now exceed defense expenditure, which is estimated at about $918 billion.
The mechanism behind the accumulation is straightforward: the federal government spends more than it collects in revenue. To cover the gap, it issues additional debt.
Federal spending is projected at roughly $7.4 trillion in fiscal 2026, compared with revenue of about $5.6 trillion. That would leave a deficit of approximately $1.8 trillion.
The higher the interest burden, the more resources are required to service existing debt. If deficits persist, the government must continue borrowing, adding to the overall debt burden.
Who holds US government debt?
The entire $40 trillion is not owed to foreign governments. Gross federal debt includes obligations held by private investors as well as so-called intragovernmental debt.
More than $32 trillion is held by private investors. This category includes US individuals and companies, banks, pension and mutual funds, insurance companies, state and local governments, the Federal Reserve and foreign investors.
According to the US Treasury, domestic investors accounted for roughly 76% of federal debt at the end of June 2026.
Foreign and international investors held $9.27 trillion, or 24.1% of the debt. Japan was the largest foreign holder of US Treasury securities, with holdings of $1.12 trillion.
The figures show that the bulk of US government debt is financed domestically, although international investors remain a significant presence in the Treasury market.
Why are bond yields rising?
The record debt level has coincided with increased investor attention to the US government bond market.
The yield on 30-year US Treasury securities reached almost 5.34% on Tuesday, its highest level since 2007.
Market conditions have been influenced by inflation concerns, geopolitical tensions, the scale of government borrowing and expectations for future US fiscal policy.
Higher yields increase the cost of new borrowing for the government. At the same time, elevated Treasury yields can affect corporate financing costs and mortgage rates.
The US Treasury has expanded its program for buying back long-term bonds. Some analysts, however, argue that such measures may address market conditions without resolving the underlying problem of persistent budget deficits.
Could the debt reach $64 trillion by 2036?
The future trajectory of US government debt remains a central concern.
The Congressional Budget Office has warned that the current fiscal path is unsustainable. According to its projections, gross federal debt could approach $64 trillion by the end of 2036.
If current trends persist, the government will face a choice between reducing spending, increasing tax revenues or continuing to borrow.
Economic growth will also remain a key factor. The CBO expects real US GDP to grow by an average of 1.8% a year between 2027 and 2036. The IMF projects US economic growth of 2.3% in 2026.
The issue, therefore, is not only the absolute size of the debt. Increasing attention is being paid to the relationship between government spending, revenues, economic growth and the cost of servicing the debt.
The $40 trillion milestone marks another major threshold for the world’s largest economy. For financial markets, however, the central question is not simply the size of the number, but whether the US economy can continue generating sufficient revenue and growth to meet the rising cost of its debt obligations.
Debt exceeds the size of the economy
In nominal terms, the US has the largest government debt in the world. However, the absolute figure alone does not fully capture the country’s debt burden. A more meaningful measure is the ratio of government debt to gross domestic product.
According to an International Monetary Fund estimate, US general government gross debt is expected to reach $40.7 trillion in 2026, compared with nominal GDP of $32.4 trillion. That would put government debt at 125.8% of GDP.
For comparison, the ratio stood at 103.7% in 2012, indicating that government debt has grown faster than the US economy over the period.
The current debt level reflects decades of accumulated budget deficits. Wars, economic recessions and large-scale government spending during the COVID-19 pandemic contributed to sharp increases in federal borrowing.
More than $1 trillion spent on interest
One of the main consequences of rising debt is the growing cost of servicing it.
Net interest payments by the federal government are estimated at around $1.04 trillion in fiscal 2026. Debt-servicing costs have therefore become comparable to the largest categories of federal spending and now exceed defense expenditure, which is estimated at about $918 billion.
The mechanism behind the accumulation is straightforward: the federal government spends more than it collects in revenue. To cover the gap, it issues additional debt.
Federal spending is projected at roughly $7.4 trillion in fiscal 2026, compared with revenue of about $5.6 trillion. That would leave a deficit of approximately $1.8 trillion.
The higher the interest burden, the more resources are required to service existing debt. If deficits persist, the government must continue borrowing, adding to the overall debt burden.
Who holds US government debt?
The entire $40 trillion is not owed to foreign governments. Gross federal debt includes obligations held by private investors as well as so-called intragovernmental debt.
More than $32 trillion is held by private investors. This category includes US individuals and companies, banks, pension and mutual funds, insurance companies, state and local governments, the Federal Reserve and foreign investors.
According to the US Treasury, domestic investors accounted for roughly 76% of federal debt at the end of June 2026.
Foreign and international investors held $9.27 trillion, or 24.1% of the debt. Japan was the largest foreign holder of US Treasury securities, with holdings of $1.12 trillion.
The figures show that the bulk of US government debt is financed domestically, although international investors remain a significant presence in the Treasury market.
Why are bond yields rising?
The record debt level has coincided with increased investor attention to the US government bond market.
The yield on 30-year US Treasury securities reached almost 5.34% on Tuesday, its highest level since 2007.
Market conditions have been influenced by inflation concerns, geopolitical tensions, the scale of government borrowing and expectations for future US fiscal policy.
Higher yields increase the cost of new borrowing for the government. At the same time, elevated Treasury yields can affect corporate financing costs and mortgage rates.
The US Treasury has expanded its program for buying back long-term bonds. Some analysts, however, argue that such measures may address market conditions without resolving the underlying problem of persistent budget deficits.
Could the debt reach $64 trillion by 2036?
The future trajectory of US government debt remains a central concern.
The Congressional Budget Office has warned that the current fiscal path is unsustainable. According to its projections, gross federal debt could approach $64 trillion by the end of 2036.
If current trends persist, the government will face a choice between reducing spending, increasing tax revenues or continuing to borrow.
Economic growth will also remain a key factor. The CBO expects real US GDP to grow by an average of 1.8% a year between 2027 and 2036. The IMF projects US economic growth of 2.3% in 2026.
The issue, therefore, is not only the absolute size of the debt. Increasing attention is being paid to the relationship between government spending, revenues, economic growth and the cost of servicing the debt.
The $40 trillion milestone marks another major threshold for the world’s largest economy. For financial markets, however, the central question is not simply the size of the number, but whether the US economy can continue generating sufficient revenue and growth to meet the rising cost of its debt obligations.
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