WASHINGTON, D.C. / RankWire.AI / – The U.S. Treasury reported that the country’s gross national debt has broken the $40 trillion barrier, reaching a new record for federal borrowing. On August 18, the total debt stood at $40.047 trillion, and by August 27, it had increased to approximately $40.078 trillion. Of this, around $32.314 trillion was debt held by the public, with government accounts holding about $7.764 trillion.
This landmark came less than five months after the debt surpassed $39 trillion in March. In August 2016, the gross national debt was close to $19.5 trillion, about half of its current amount. The government’s debt expands when federal expenditures outpace revenue, which is primarily financed through the issuance of Treasury bills, notes, bonds, and government accounts.
U.S. federal finances are still strained by substantial annual budget deficits. The Congressional Budget Office reported a $1.8 trillion deficit for the first ten months of fiscal 2026, exceeding the same period in fiscal 2025 by $169 billion. Revenue grew by $139 billion, or 3%, while federal spending increased by $308 billion, or 5%. The CBO estimates the full-year deficit will reach about $2.1 trillion.
Federal interest payments surpass $1 trillion
Interest costs now constitute a larger portion of the federal budget. Net interest expenses are projected to go over $1 trillion in fiscal 2026, up from roughly $970 billion in 2025. This represents about 3.3% of the U.S. gross domestic product. Current forecasts indicate that by 2036, annual net interest payments could reach $2.1 trillion, which would be roughly 4.6% of GDP.
Publicly held debt has also grown relative to the nation’s economic size. The projections estimate that by 2026, debt held by the public will be about 101% of GDP, rising to 120% by 2036. The historical peak was 106% in 1946 following World War II. Under the same baseline, publicly held debt could approach $56 trillion by 2036, with gross federal debt nearing $64 trillion.
Debt levels influence borrowing costs and economic growth
Significant federal borrowing also impacts financial conditions across the broader economy. The Congressional Budget Office has indicated that increased government borrowing may push interest rates higher and reduce private investment over time. This can limit capital available for business expansion and productivity enhancements, potentially affecting worker wages and household income. Consumer borrowing rates, including those for mortgages and auto loans, are influenced by many factors, including overall interest-rate trends.
While gross national debt and the federal deficit both reflect different aspects of the government’s fiscal health, both remain elevated in fiscal 2026. The gross debt has crossed the $40 trillion mark, and the projected deficit is $2.1 trillion, which equals roughly 5.8% of GDP—significantly higher than the 50-year average of about 3.8%.