US national debt has passed $40 trillion, more than doubling in a decade as heavy government spending and rising interest costs pile up. The milestone lands alongside a jump in 30-year Treasury yields to a near two-decade high, pushing the Treasury Department to double its bond buybacks through early November.
US national debt has passed $40 trillion (£29.4 trillion), more than double the level it stood at in 2016, when it was just under $20 trillion, Treasury figures show. The rise reflects years of heavy spending under both the Trump and Biden administrations, along with steadily climbing interest payments.
The pace caught forecasters off guard. The Congressional Budget Office had projected total borrowing would reach $39.6 trillion only by the end of fiscal year 2026, yet the US is already nearing its $41.1 trillion debt ceiling, with debt projected to climb to about $64 trillion by 2036.
Bond yields climb to a near two-decade high
The interest rate on 30-year Treasury bonds hit 5.34% on Tuesday, the highest level in almost 20 years, before easing to 5.18% after the Treasury Department said it would increase its buyback operations by at least double, from $2 billion to $4 billion, effective from 9 September to 4 November. The recent surge in yields has been driven by rising oil prices linked to the US-Iran war, with investors worried about inflation.
Those yields, which shape how much the government, companies, and consumers pay to borrow, feed directly into mortgages, car loans, and credit cards. The average interest rate on 30-year fixed mortgages currently stands at 6.67%, according to Freddie Mac, still below the 7.7% average seen in 2023.
Debt load stands out globally
The debt-to-GDP ratio for the US is 125.8%, according to the International Monetary Fund, one of the highest among major economies. In comparison, the UK and China carry ratios of 103.6% and 106.9%, while Japan's tops 200%, the highest of the world's major economies.
Meanwhile, the Federal Reserve held its benchmark rate in the 3.50%-3.75% range for a fifth consecutive meeting. Minutes showed several participants favored increased rates last month, while many participants said hikes would likely be necessary if inflation did not decline toward the 2% target.
Economics professor David Jacks of the National University of Singapore said the pace of America's growing debt is accelerating, warning that "and at some point, the bills will come due".
Source: BBC News
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