The total US public debt has exceeded $40 trillion for the first time. According to the Treasury Department, on 18 August it stood at $40.047 trillion, of which $32.266 trillion was debt held outside the government’s own accounts, and $7.782 trillion was intra-governmental debt. Since the start of 2017, the nominal value of the debt has more than doubled.
However, this record figure alone does not mean that the US is on the brink of a financial crisis. What is more important for the economy is the debt-to-GDP ratio and the cost of servicing the debt. The Congressional Budget Office estimates that debt held by investors will account for around 101 per cent of GDP in 2026, and could rise to 120 per cent of GDP by 2036.
The problem becomes more apparent given current interest rates. The federal deficit after the first ten months of the 2026 financial year reached around $1.8 trillion. At the same time, in August, the yield on 30-year Treasury bonds at auction reached 5.22 per cent, the highest level since 2001.
For businesses, this means the risk of persistently high borrowing costs. The government’s substantial borrowing requirements may keep bond yields high, indirectly increasing companies’ financing costs and putting pressure on the valuations of firms particularly sensitive to interest rates, including technology companies.
The most significant consequence, however, is a reduction in budgetary flexibility. The more funds are absorbed by interest payments, the more difficult it becomes to finance infrastructure, research or new industrial programmes without increasing the deficit. The $40 trillion threshold is therefore primarily a sign of a growing fiscal problem, rather than a crisis point in its own right.
