US national debt has crossed US$40 trillion for the first time, underscoring the growing fiscal strain facing the world’s largest economy as persistent budget deficits and rising interest costs continue to push borrowing higher.
Data from the US Treasury showed gross national debt reached US$40.05 trillion as of August 18, 2026.
The milestone comes just five months after federal debt crossed US$39 trillion in March, following its move above US$38 trillion in October 2025, highlighting how quickly the debt burden has expanded.
Rising interest costs have become a major contributor to the increase as the government carries a larger debt load while borrowing costs remain elevated. Government spending on programmes including Social Security and Medicare has also increased as the US population ages.
The Congressional Budget Office (CBO) expects gross national debt to rise further to US$63 trillion by 2036. The annual federal deficit is also projected to widen from about US$2.1 trillion in the current fiscal year to US$3.1 trillion a year over the next decade.
Another warning sign emerged in March when debt held by the public, a measure commonly used to assess a country’s debt burden against the size of its economy, reached US$31.27 trillion.
That figure exceeded US gross domestic product (GDP) of US$31.22 trillion, marking the first time in about 80 years that publicly held debt had surpassed the size of the US economy.
The CBO expects the debt-to-GDP ratio to continue climbing, potentially exceeding the previous record of 106% recorded in 1946. The ratio is projected to reach about 120% by 2036 if current fiscal trends persist.
Michael A. Peterson, chief executive officer of the Peter G. Peterson Foundation, said the rising debt burden could increasingly affect Americans through higher borrowing costs and inflation.
He noted that federal interest payments now exceed defence spending, while higher borrowing costs can feed into household expenses including mortgages, car loans and credit card debt.
The growing debt burden could also weigh on economic growth by slowing household income growth as living costs remain elevated.
In its fiscal outlook, the CBO warned that publicly held debt is expected to grow faster than the economy in the coming years. Such a trajectory could slow economic growth, crowd out private investment and further increase the government’s interest burden.
The agency has also warned that continued debt accumulation could increase the risk of a fiscal crisis if investors lose confidence in the US government’s ability to manage its debt.
Such a scenario could trigger a sharp rise in interest rates and create wider disruptions across the global financial system.
Persistent fiscal pressure could also raise inflation expectations and, over the longer term, put pressure on the US dollar’s position as the world’s leading reserve currency.
Peterson said policymakers still had options to address the country’s fiscal challenges but stressed that action was needed to safeguard economic prosperity and living standards for future generations.
