USA

US National Debt Surpasses $40 Trillion for First Time

21 August 2026 01:08 AM

NEWS DESK

The United States’ national debt has surpassed the historic $40 trillion mark for the first time, doubling in less than a decade amid rising government spending and higher interest costs.

According to US Treasury Department data, total outstanding government bonds and other public debt stood at $40.05 trillion as of August 18. The figure was below $20 trillion in 2016.

The rapid increase in debt in recent years has been driven largely by higher government spending and rising interest rates. Large-scale government expenditure continued under both the Trump and Biden administrations, adding to the country’s debt burden.

The Congressional Budget Office (CBO) had previously projected that US national debt would reach $39.6 trillion by the end of fiscal year 2026. The debt crossing $40 trillion ahead of that forecast has renewed concerns about rising interest payments and the government’s growing dependence on borrowing.

The CBO has warned that the United States is approaching its $41.1 trillion debt limit and that the national debt could rise to nearly $64 trillion by 2036.

Bond yields hit two-decade high

The surge in US borrowing has also affected international financial markets. The yield on 30-year US Treasury bonds rose to 5.34% on Tuesday, its highest level in nearly two decades.

Long-term Treasury yields influence borrowing costs for mortgages, car loans and credit cards. Recent market volatility has also been attributed to higher oil prices and inflation linked to the Iran-US conflict, as well as heavy borrowing by technology companies investing in artificial intelligence.

David Jacks, an economics professor at the National University of Singapore, said the pace of US debt accumulation was accelerating and warned that the country would eventually have to pay the bill.

He cautioned that failure to manage the debt could trigger an economic crisis similar to the 2008 financial crisis.

Treasury increases bond buybacks

To ease pressure in the bond market, the US Treasury Department has announced plans to increase its bond buyback programme from $2 billion to at least $4 billion between September 9 and November 4.

Following the announcement, the yield on long-term Treasury bonds fell somewhat to around 5.18%.

John Canavan, chief analyst at Oxford Economics, described the move as a temporary relief measure, arguing that it would not bring about a significant long-term change given the enormous size of the US debt.

Rene Albrecht, a senior analyst at Germany’s DZ Bank, said the Treasury had been forced to act quickly to contain interest rates, with the US midterm elections only three months away.

Economist Mohamed El-Erian also warned on social media that while temporary measures could help control interest rates, they could produce unintended negative consequences and side effects.

Debt-to-GDP ratio remains high

According to International Monetary Fund (IMF) estimates, US government debt is currently equivalent to 125.8% of GDP, placing the country among those with the highest debt ratios in the world.

For comparison, the debt-to-GDP ratio is around 103.6% in the United Kingdom, 106.9% in China and more than 200% in Japan.

The crossing of the $40 trillion threshold underscores the growing challenge facing Washington as it seeks to balance government spending, borrowing costs and long-term fiscal sustainability.

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