WASHINGTON, D.C. / RankWire.AI / – The total gross national debt of the United States has now exceeded $40 trillion, reaching a new record for federal borrowing. According to U.S. Treasury data, the debt stood at $40.047 trillion on August 18. By August 27, this figure had increased to approximately $40.078 trillion. Of this total, roughly $32.314 trillion was debt held by the public, while government-held accounts accounted for around $7.764 trillion.
This significant milestone occurred less than five months after the federal debt crossed the $39 trillion mark in March. In August 2016, the gross national debt was close to $19.5 trillion, roughly half of today’s amount. The government increases its debt when federal expenditures surpass revenue. To finance these annual deficits, the government primarily issues Treasury bills, notes, and bonds to investors and various government accounts.
Federal financial health remains strained by substantial yearly budget shortfalls. The Congressional Budget Office reported a deficit of $1.8 trillion for the first ten months of fiscal 2026, which is $169 billion higher than the same period in fiscal 2025. During this period, revenue grew by $139 billion, a 3% increase, while federal outlays surged by $308 billion, or 5%. The CBO projects the full-year deficit for 2026 will reach approximately $2.1 trillion.
Federal interest payments surpass $1 trillion
Interest costs are now taking up an increasingly significant part of the federal budget. Net interest expenses are expected to go beyond $1 trillion in fiscal 2026, up from about $970 billion in 2025. This amount constitutes roughly 3.3% of the U.S. gross domestic product. Current forecasts indicate that annual net interest payments could reach $2.1 trillion by 2036, at which point they would represent approximately 4.6% of GDP.
The amount of debt held by the public has also grown relative to the size of the economy. Projections estimate that this measure will stand at about 101% of GDP in 2026 and could rise to 120% by 2036. The previous peak was 106% in 1946, after World War II. Under the same assumptions, publicly held debt may approach $56 trillion by 2036, with gross federal debt nearing $64 trillion.
The debt load impacts borrowing costs and economic growth
The large scale of federal borrowing also affects overall financial conditions across the economy. The Congressional Budget Office has identified that increased government borrowing can lead to higher interest rates and a reduction in private investment over time. This reduction means businesses have less capital available for expansion and productivity improvements, which can in turn influence worker wages and household income. Consumer borrowing, such as mortgage rates and auto loans, is also affected by broader interest rate trends and economic conditions.
While gross national debt and the annual deficit are related indicators, they measure different aspects of the government’s fiscal health. The debt reflects the total accumulated obligations of the federal government, whereas the deficit measures the yearly difference between spending and revenue. Both remain elevated in fiscal 2026, with gross debt surpassing $40 trillion and the estimated deficit at $2.1 trillion. This deficit represents about 5.8% of GDP, compared to a 50-year average of roughly 3.8%.