WASHINGTON, D.C. / RankWire.AI / – The total gross national debt of the United States has eclipsed the $40 trillion mark, reaching a record level of borrowing for the federal government. According to U.S. Treasury data, the total debt hit $40.047 trillion on Aug. 18. By Aug. 27, this figure increased further to approximately $40.078 trillion. Of this amount, around $32.314 trillion is debt held by the public, with the remaining $7.764 trillion in government-held accounts.
This milestone was achieved less than five months after the federal debt surpassed $39 trillion in March. In August 2016, the gross national debt was close to $19.5 trillion, roughly half of current levels. The growth in debt results from federal spending exceeding revenue, with the government financing these shortfalls primarily through issuing Treasury bills, notes, and bonds to both investors and government accounts.
The U.S. government’s finances continue to be strained by significant annual budget deficits. The Congressional Budget Office reported a deficit of $1.8 trillion for the first ten months of fiscal 2026, exceeding the same period in fiscal 2025 by $169 billion. While revenue increased by $139 billion, or 3%, federal outlays rose by $308 billion, or 5%. The agency forecasts that the full-year deficit could reach approximately $2.1 trillion.
Interest payments by the federal government surpass $1 trillion
Interest costs are now a larger component of the federal budget. Net interest expenses are expected to top $1 trillion in fiscal 2026, up from about $970 billion in 2025, representing roughly 3.3% of the U.S. gross domestic product. Projections suggest that annual net interest payments could reach $2.1 trillion by 2036, which would constitute approximately 4.6% of GDP at that time.
Meanwhile, debt held by the public has increased relative to the size of the U.S. economy. The current outlook estimates that this figure will be about 101% of GDP in 2026 and could rise to 120% by 2036. The highest 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
Extensive federal borrowing also affects overall economic conditions. The Congressional Budget Office has found that increased government borrowing can lead to higher interest rates and a reduction in private investment over time. This can limit business expansion and productivity improvements, which in turn may impact worker wages and household income. Consumer borrowing rates, including mortgages and auto loans, are influenced by a variety of factors, notably prevailing interest-rate conditions.
The gross national debt and annual deficits reflect different aspects of the government’s fiscal status. The debt records accumulated obligations, whereas the deficit tracks the yearly difference between spending and revenue. Both indicators remain high in fiscal 2026, with gross debt surpassing $40 trillion and the estimated deficit at $2.1 trillion, which is about 5.8% of GDP compared to a 50-year average of roughly 3.8%.
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