US national debt tops $40 trillion for the first time
The US gross national debt surpassed $40 trillion on Tuesday, exceeding earlier official forecasts as borrowing accelerates and long-term bond yields climb. Economists warn rising interest costs could squeeze consumers and businesses even without a full-blown crisis.
According to data released Wednesday by the US Treasury Department, total public debt outstanding reached $40.05 trillion at the close of business Tuesday. That figure surpasses an earlier projection from the Congressional Budget Office, which had estimated debt would hit $39.4 trillion by the end of fiscal year 2026.
The faster-than-expected rise has been driven in part by President Donald Trump's tariffs, which were later invalidated, alongside growing long-term obligations tied to social security and health care, plus climbing interest payments.
Borrowing costs rise
Investor unease over inflation, the war in the Middle East and government spending has pushed up the cost of borrowing. Long-term Treasury bond yields rose Tuesday to their highest level since 2007, forcing the government to refinance debt at the steepest rates seen since before the 2008 financial crisis. The Treasury Department moved early Wednesday to steady the bond market, and yields eased somewhat afterward.
Jessica Riedl, a budget and tax fellow at the Brookings Institution, said the US has been running roughly $2 trillion annual deficits even during periods of peace and economic growth. She noted that while deficits of three to four percent of GDP once alarmed markets, levels are now closer to six to seven percent of GDP.
No automatic trigger
Analysts point out there is no specific debt-to-GDP threshold that automatically causes a crisis, and many economists regard debt held by the public as a more meaningful measure than the gross figure. Still, Riedl said crossing symbolic milestones like $40 trillion tends to psychologically prompt markets to reassess rising debt.
Caleb Quakenbush, director of fiscal policy at the Bipartisan Policy Center, said Congress and successive administrations have failed to address the spending trajectory in any meaningful or lasting way. He warned of uncertainty surrounding the unprecedented borrowing levels now being seen, noting that bond markets could face serious strain in a crisis scenario, and even short of that, consumers and businesses could face higher borrowing costs. Treasury Secretary Scott Bessent has previously set a goal of reducing the deficit to three percent of GDP.
