WASHINGTON, D.C. / RankWire.AI / – The total gross national debt of the United States has now exceeded $40 trillion, setting a new record for federal borrowing, according to U.S. Treasury figures that indicated the overall debt reached $40.047 trillion on August 18, and by August 27, it had increased to approximately $40.078 trillion. Out of this, roughly $32.314 trillion was debt held by the public, with the remaining about $7.764 trillion in government accounts.
This milestone was achieved less than five months after the federal debt surpassed $39 trillion in March, with the gross national debt being around $19.5 trillion in August 2016—roughly half of today’s total. The U.S. government adds to this debt when spending exceeds revenue, primarily funding the shortfalls through issuing Treasury bills, notes, and bonds to investors and government accounts.
Persistent large annual budget deficits continue to pressure federal finances; as reported by the Congressional Budget Office, the deficit for the first ten months of fiscal 2026 reached $1.8 trillion, surpassing 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 total deficit for the year will be about $2.1 trillion.
Interest payments on federal debt exceed $1 trillion
The cost of interest payments has become a more significant part of the federal budget, with net interest expenses expected to top $1 trillion in fiscal 2026, an increase from approximately $970 billion in 2025, representing about 3.3% of U.S. gross domestic product. Forecasts indicate that annual net interest costs could reach $2.1 trillion by 2036, which would constitute roughly 4.6% of GDP at that time.
Debt held by the public has also grown relative to the country’s economic size, with projections placing this at around 101% of GDP in 2026. It is expected to rise to 120% by 2036, with the previous peak being 106% in 1946, following World War II. Under the same baseline, publicly held debt could approach $56 trillion by 2036, while gross federal debt nears $64 trillion.
The rising debt load influences borrowing costs and economic investment
The substantial federal borrowing also impacts the broader economy, as the Congressional Budget Office has identified that increased government debt can lead to higher interest rates, which in turn can diminish private investment over time, ultimately reducing the capital available to businesses for expansion and productivity improvements. Such effects can also impact worker wages and household incomes, as mortgage rates, auto loans, and other consumer credit options are affected by these interest-rate conditions.
While gross national debt and the federal deficit are related, they measure different fiscal aspects: the debt reflects the total accumulated obligations of the government, whereas the deficit indicates the yearly gap between spending and revenue. Both measures remain elevated in fiscal 2026, with gross debt exceeding $40 trillion and the annual deficit estimated at $2.1 trillion, which is approximately 5.8% of GDP compared to a 50-year average of roughly 3.8%.