The US national debt crossed $37 trillion in February 2026, according to the Treasury Department's daily statement. The debt-to-GDP ratio stands at approximately 123%, the highest level since the post-World War II era. The Congressional Budget Office projects the annual federal budget deficit will exceed $2 trillion in fiscal year 2026, driven by rising interest costs and mandatory spending commitments.
Interest Payments
Net interest payments on the federal debt reached $1.05 trillion in fiscal year 2025, making it the largest single line item in the federal budget for the first time, surpassing both defence spending ($886 billion) and Social Security ($1.46 trillion when including OASDI). With the 10-year Treasury yield at approximately 4.5%, the average cost of servicing the debt has risen sharply from the near-zero rates that prevailed before 2022.
The Treasury has been increasing the issuance of shorter-duration bills and notes, which has contributed to a steepening of the yield curve. The 2-year Treasury yield was 4.3%, while the 30-year yield reached 4.8%. Foreign holders of US treasuries, led by Japan ($1.08 trillion) and China ($759 billion), have gradually reduced their positions, increasing the burden on domestic buyers.
Credit Rating Concerns
Fitch downgraded the US credit rating from AAA to AA+ in August 2023, citing "fiscal deterioration." Moody's maintains its Aaa rating but assigned a negative outlook in November 2023. The ongoing trajectory of debt accumulation has led some analysts to suggest that a further downgrade could occur if Congress fails to address the structural deficit.
Why It Matters for Markets
Rising government borrowing competes with the private sector for capital, potentially pushing interest rates higher and crowding out business investment. Bitcoin advocates have pointed to the debt situation as a case for "hard money" alternatives, with some arguing that the dollar's purchasing power will inevitably erode as debt levels grow. Gold prices have risen alongside debt concerns, with the metal reaching record highs above $3,100 per ounce.
For real-time debt data, visit US Treasury Fiscal Data. For CBO projections, see the Congressional Budget Office.