The US national debt has reached $40 trillion, doubling over the past decade due to sustained government spending and rising interest costs.
Key facts
- •The US national debt reached $40.05 trillion as of August 18.
- •The debt-to-GDP ratio for the US is 125.8%, according to the International Monetary Fund.
- •Treasury buyback operations will increase to at least $4 billion starting September 9.
- •The yield on 30-year bonds reached 5.34% on Tuesday, the highest level in nearly two decades.
- •The Federal Reserve has held its benchmark interest rate in the 3.50%-3.75% range for five consecutive meetings.
US national debt has reached $40 trillion, a figure that has more than doubled since 2016. Treasury Department data indicates the total reached $40.05 trillion as of August 18, driven by years of federal spending under the Trump and Biden administrations and increasing interest payments.
By the numbers
Rising Borrowing and Interest Costs
The Congressional Budget Office had previously projected the debt would reach $39.6 trillion only by the end of fiscal year 2026. Current projections suggest the debt could climb to approximately $64 trillion by 2036. The government is also nearing its $41.1 trillion debt ceiling, while the debt-to-GDP ratio currently stands at 125.8%.
Treasury Market Interventions
In response to rising yields on 30-year bonds, which hit a near 20-year high of 5.34%, the Treasury Department announced it would increase its buyback operations from $2 billion to $4 billion. This intervention, effective from September 9 to November 4, aims to provide liquidity support and ease long-term borrowing costs. Following the announcement, 30-year borrowing costs eased to 5.18%.
Economic Context and Federal Reserve Policy
The Federal Reserve has maintained its benchmark interest rate in the 3.50%-3.75% range for five consecutive meetings. While recent data showed a slight easing in inflation and job losses in July, minutes from the Fed's last meeting indicate that some policymakers favor further rate hikes if inflation does not decline toward the 2% target. Meanwhile, average 30-year fixed mortgage rates currently sit at 6.67%.
Timeline
- 2016The US national debt stood at just under $20 trillion.
- September 9The Treasury's increased buyback operations are scheduled to begin.
- November 4The Treasury's increased buyback operations are scheduled to end.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by BBC Business.
