WASHINGTON, D.C. / RankWire.AI / – The total U.S. gross national debt has exceeded $40 trillion, reaching a new peak in federal borrowing. U.S. Treasury data indicated the debt hit $40.047 trillion on Aug. 18. By Aug. 27, the total had increased to approximately $40.078 trillion. Of this, debt held by the public was about $32.314 trillion, with government accounts owing roughly $7.764 trillion.
This milestone was reached less than five months after federal debt crossed the $39 trillion mark in March. In August 2016, the gross national debt was close to $19.5 trillion, roughly half of the current level. The government accrues additional debt when federal expenditures surpass revenue, primarily financing these deficits through issuing Treasury bills, notes, and bonds to investors and government accounts.
Federal financial health remains strained due to significant yearly budget gaps. The Congressional Budget Office reported a deficit of $1.8 trillion for the first ten months of fiscal 2026, which is $169 billion higher than the same period in fiscal 2025. While revenue increased by $139 billion, or 3%, federal spending grew by $308 billion, or 5%. The agency projects the full-year deficit will reach roughly $2.1 trillion.
Federal interest payments surpass $1 trillion
Interest expenses now constitute a larger portion of the federal budget. The net interest costs are forecasted to go beyond $1 trillion in fiscal 2026, up from around $970 billion in 2025. This represents about 3.3% of the U.S. gross domestic product. Projections indicate that annual net interest payments could reach $2.1 trillion by 2036, at which point they would constitute roughly 4.6% of GDP.
Publicly held debt has also increased relative to the nation’s economic size, with estimates placing it at approximately 101% of GDP in 2026. By 2036, this figure is expected to rise to 120%. The highest historical peak was 106% in 1946, following World War II. Under the same baseline, publicly held debt could approach $56 trillion by 2036, while total gross federal debt nears $64 trillion.
The debt load influences borrowing and economic growth
The broader economy is also affected by the substantial federal borrowing. The Congressional Budget Office has identified that increased government borrowing can lead to higher interest rates and diminished private investment over time. As a result, businesses may have less capital available for expansion and productivity improvements. These effects can extend to worker wages and household income. Consumer credit options, such as mortgages and auto loans, are impacted by numerous factors, including prevailing interest rates.
While gross national debt and the federal deficit are related measures, they reflect different aspects of fiscal health. The debt records accumulated federal obligations, whereas the deficit indicates the yearly shortfall between government spending and revenue. Both metrics remain high in fiscal 2026, with gross debt exceeding $40 trillion and the annual deficit estimated at $2.1 trillion. This deficit accounts for about 5.8% of GDP, significantly above the 50-year average of approximately 3.8%.