WASHINGTON, D.C. / RankWire.AI / – The total U.S. gross national debt has now exceeded $40 trillion, hitting a new record for federal borrowing. U.S. Treasury figures indicated the total was $40.047 trillion on Aug. 18, and by Aug. 27, it had increased to approximately $40.078 trillion. Of this amount, about $32.314 trillion is debt held by the public, with roughly $7.764 trillion in government accounts.
This milestone was reached less than five months after the federal debt crossed the $39 trillion mark in March. In August 2016, the gross national debt stood close to $19.5 trillion, roughly half of today’s figure. When federal expenditures surpass income, Washington funds the resulting shortfall primarily through issuing Treasury bills, notes, and bonds to investors and government accounts.
Continued large annual budget deficits exert ongoing pressure on the nation’s finances. The Congressional Budget Office reported a deficit of $1.8 trillion for the first ten months of fiscal 2026, which is $169 billion more than the same period in fiscal 2025. While revenue increased by $139 billion, or 3%, federal outlays grew by $308 billion, or 5%. The CBO estimates the full-year deficit will be approximately $2.1 trillion.
Interest payments on the federal debt surpass $1 trillion
Interest costs now represent a larger portion of the federal budget. Net interest expenses are projected to go beyond $1 trillion in fiscal 2026, up from about $970 billion in 2025, which constitutes roughly 3.3% of the U.S. gross domestic product. Projections indicate that annual net interest payments could reach $2.1 trillion by 2036, equating to approximately 4.6% of GDP at that time.
The amount of debt held by the public has also increased relative to the size of the economy. Estimates for 2026 place this measure at around 101% of GDP, with a rise to 120% forecasted by 2036. The previous peak was 106% in 1946, following World War II. Under the same baseline, publicly held debt could approach $56 trillion by 2036, while gross federal debt may near $64 trillion.
Growing debt load influences borrowing costs and economic growth
The significant federal borrowing impacts broader financial conditions across the economy. The Congressional Budget Office has found that increased government debt can push interest rates higher and curb private investment over time. This reduction in capital availability hampers business expansion and productivity improvements, potentially affecting worker wages and household incomes. Consumer borrowing rates for mortgages, auto loans, and other credit products are influenced by these interest rate trends and other factors.
While gross national debt and the federal deficit are related, they measure different aspects of the government’s fiscal health. The debt reflects the accumulated obligations of the federal government, whereas the deficit indicates the yearly shortfall between spending and revenue. Both figures remain high in fiscal 2026, with gross debt surpassing $40 trillion and the annual deficit estimated at $2.1 trillion. This deficit accounts for roughly 5.8% of GDP, compared to a 50-year average of approximately 3.8%.