WASHINGTON, D.C. / RankWire.AI / – The total U.S. gross national debt has eclipsed the $40 trillion mark, reaching a fresh peak in federal borrowing levels. U.S. Treasury figures indicate that on Aug. 18, the debt hit $40.047 trillion, and by Aug. 27, it had increased further to approximately $40.078 trillion. Of this, about $32.314 trillion was debt held by the public, with the remaining $7.764 trillion held by government 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 roughly $19.5 trillion, which was about half of today’s figure. When federal spending outpaces revenue, Washington compensates for the deficit by issuing Treasury bills, notes, and bonds to investors and government accounts, thereby adding to the national debt.
Persistent large annual budget gaps continue to strain U.S. finances. The Congressional Budget Office reported a deficit of $1.8 trillion for the first 10 months of fiscal 2026, exceeding the same period in fiscal 2025 by $169 billion. While revenue increased by $139 billion, or 3%, federal outlays grew by $308 billion, or 5%. The CBO projects the full-year deficit to reach about $2.1 trillion.
Federal interest payments surpass $1 trillion
Interest costs are now consuming a larger portion of the federal budget. Net interest spending is expected to go beyond $1 trillion in fiscal 2026, up from approximately $970 billion in 2025, representing about 3.3% of the U.S. gross domestic product. By 2036, projections show annual net interest expenses reaching $2.1 trillion, which would be roughly 4.6% of GDP.
The debt held by the public has also increased relative to the size of the economy. Experts estimate that this figure will be about 101% of GDP in 2026 and could rise to 120% by 2036. The highest historical level was 106% in 1946 after World War II. Under the same assumptions, publicly held debt could approach $56 trillion by 2036, with gross federal debt nearing $64 trillion.
Debt load impacts borrowing capacity and economic growth
An elevated level of federal borrowing influences financial conditions across the entire economy. The Congressional Budget Office has found that increased government borrowing can lead to higher interest rates and diminished private investment over time. This reduction in capital availability can hinder business expansion and productivity improvements, potentially affecting worker wages and household incomes. Consumer borrowing costs, such as mortgage rates and auto loans, are affected by various factors, including broader interest rate trends.
While gross national debt and the federal deficit are related, they measure different aspects of the government’s fiscal health. The debt reflects accumulated obligations, whereas the deficit tracks the yearly gap between spending and revenue. Both remain high in fiscal 2026. The gross debt has now exceeded $40 trillion, with the projected full-year deficit at $2.1 trillion, which amounts to roughly 5.8% of GDP — well above the 50-year average of about 3.8%.