WASHINGTON, D.C. / RankWire.AI / – The total U.S. gross national debt has exceeded the $40 trillion mark, reaching a new record for federal borrowing. U.S. Treasury data indicated the debt hit $40.047 trillion on August 18. By August 27, it had increased further to approximately $40.078 trillion. Out of this, roughly $32.314 trillion is debt held by the public, with the remaining $7.764 trillion held by government accounts.
This achievement occurred less than five months after the federal debt crossed the $39 trillion threshold in March. Back in August 2016, the gross national debt was nearly $19.5 trillion, roughly half of its current value. The government’s borrowing expands when federal expenditures outpace income, primarily financed through issuing Treasury bills, notes, bonds to investors, and government accounts.
The country’s fiscal health is strained by significant annual budget deficits. The Congressional Budget Office reported a deficit of $1.8 trillion during the first ten months of fiscal 2026. This figure is $169 billion higher than the same period in fiscal 2025. While revenue grew by $139 billion, or 3%, federal spending increased by $308 billion, or 5%. The CBO projects the total deficit for the year to reach approximately $2.1 trillion.
Interest payments on debt top $1 trillion
Interest costs are now taking up a more significant portion of the federal budget. Net interest expenses are forecasted to go beyond $1 trillion in fiscal 2026, up from about $970 billion in 2025. This represents approximately 3.3% of the U.S. gross domestic product. Projections suggest that annual interest costs could reach $2.1 trillion by 2036, at which point they would account for around 4.6% of GDP.
The amount of debt held by the public has also increased relative to the size of the economy. Predictions estimate this metric at approximately 101% of GDP in 2026, with an increase to 120% by 2036. The previous peak was 106% in 1946, following World War II. Under the same baseline, publicly held debt may approach $56 trillion by 2036, while gross federal debt could nearly hit $64 trillion.
The debt load influences borrowing capacity and economic growth
High levels of federal borrowing also impact financial conditions throughout the economy. The Congressional Budget Office has identified that increased government borrowing can lead to higher interest rates and decreased private investment over time. This scenario reduces the available capital for businesses to expand and improve productivity. Such effects can subsequently affect worker compensation and household incomes. Moreover, mortgage rates, auto loans, and other consumer credits are influenced by overall interest-rate trends and economic factors.
While gross national debt and the federal deficit measure different aspects of the government’s fiscal state—debt reflecting accumulated obligations, and deficit tracking yearly differences—both remain notably high in fiscal 2026. The gross debt has surpassed $40 trillion, whereas the annual deficit is projected at $2.1 trillion. This deficit constitutes roughly 5.8% of GDP, compared to a fifty-year average of about 3.8%.