WASHINGTON, D.C. / RankWire.AI / – The total gross national debt of the United States has exceeded the $40 trillion mark, reaching a new peak in federal borrowing. According to U.S. Treasury figures, the debt stood at $40.047 trillion on August 18. By August 27, the total had increased to approximately $40.078 trillion. Out of this, roughly $32.314 trillion is debt held by the public, with the remaining $7.764 trillion in government accounts.
This milestone was achieved less than five months after the debt surpassed $39 trillion in March. In August 2016, the gross national debt was around $19.5 trillion, which is approximately half of the current level. The rise in debt results from federal spending surpassing revenue, with the government financing those deficits mainly through issuing Treasury bills, notes, and bonds to investors and government accounts.
The U.S. economy continues to face substantial fiscal pressures due to large annual budget shortfalls. The Congressional Budget Office reported a deficit of $1.8 trillion for the first ten months of fiscal 2026. This figure is $169 billion higher than the same period in fiscal 2025. Revenue increased by $139 billion, or 3%, whereas federal outlays grew by $308 billion, or 5%. The agency projects the full-year deficit will reach approximately $2.1 trillion.
Federal interest expenses surpass $1 trillion
Interest costs are now taking up a larger portion of the federal budget. Net interest payments are expected to top $1 trillion in fiscal 2026, an increase from about $970 billion in 2025, representing roughly 3.3% of the U.S. gross domestic product. Projections indicate that annual net interest payments could reach $2.1 trillion by 2036, which would be about 4.6% of GDP at that time.
Debt held by the public has also increased relative to the size of the U.S. economy. Current estimates put this measure at around 101% of GDP in 2026, with forecasts showing it reaching 120% by 2036. The highest historical point was 106% in 1946 after World War II. Under the same baseline, the debt held by the public could approach $56 trillion by 2036, while gross federal debt might near $64 trillion.
Debt levels impact borrowing costs and economic growth
Significant federal borrowing also influences financial conditions across the broader economy. The Congressional Budget Office has identified that increased government borrowing can push interest rates higher and diminish private investment over time. This reduction in capital availability can hamper business expansion and productivity improvements, affecting worker wages and household incomes. Consumer borrowing rates such as mortgages and auto loans are also affected by overall interest-rate trends.
While gross national debt and the federal deficit are related, they measure different aspects of government finances. The debt reflects the total accumulated obligations, whereas the deficit indicates the yearly gap between government spending and revenue. Both figures remain elevated in fiscal 2026, with gross debt exceeding $40 trillion and the estimated annual deficit at $2.1 trillion. This deficit accounts for about 5.8% of GDP, compared to a 50-year average of roughly 3.8%.