US national debt has more than doubled in a decade to reach $40tn (£29.4tn), Treasury figures show.
The debt stood at just under $20tn in 2016. Its rise reflects years of heavy spending under both the Trump and Biden administrations, along with higher interest payments that have steadily added to the total.
The Congressional Budget Office (CBO) had projected overall borrowing would reach $39.6tn by the end of fiscal year 2026.
The faster-than-expected rise has increased concerns about how quickly government borrowing is growing and what it means for future interest costs.
The CBO said the US is nearing its $41.1tn debt ceiling, with debt projected to climb to about $64tn by 2036.
The $40.05tn total, recorded on 18 August, covers all outstanding Treasury bonds, bills and notes and highlights the scale of US borrowing under two presidents.
As the federal government spends more to cover budget deficits, consumers have faced higher interest rates and inflation.
The interest rate on 30-year bonds, which are used to raise funds from investors, reached 5.34% on Tuesday, its highest level in almost 20 years.
Those rates, known as yields, influence how much the US government, companies and consumers pay to borrow. They affect mortgages, car loans and credit cards.
The recent rise in bond yields has been driven by higher oil prices linked to the US-Iran war, with investors concerned about inflation.
There are also concerns about government debt and the huge amounts being borrowed by technology firms to develop artificial intelligence (AI), with uncertainty over the timing and level of returns.
While ordinary people are unlikely to be affected immediately, difficulties in managing the debt could eventually trigger disruptions on a scale similar to the 2008 financial crisis, according to economics professor David Jacks.
The pace of America’s growing debt is accelerating “and at some point, the bills will come due,” said Jacks of the National University of Singapore.
The Treasury Department announced on Wednesday that it would increase its buyback operations by “at least double”, from $2bn to $4bn, from 9 September to 4 November.
It said the intervention reflected its “desire to provide greater liquidity support” for longer-term bonds.
The rate on borrowing costs over 30 years eased to 5.18% following the announcement.
John Canavan, lead analyst at Oxford Economics, said the decision to increase purchases appeared to be an “attempt to provide relief” on long-term borrowing costs, which had been under “significant pressure from rising oil prices, inflation risks, and heavy supply due to global sovereign and corporate borrowing needs”.
But he said that, given the size of outstanding Treasury debt, the increase in government buybacks was “unlikely to provide meaningful long-term relief”.
Rene Albrecht, senior analyst at DZ Bank in Germany, said the US government feared the “pain of 5% or higher yields” over the long term because it would raise borrowing costs for both the government and private sector.
“It’s only three months until the midterm elections,” Albrecht said. “They [the Treasury] have had to grab into the toolkit in order to get a hand on the recent rise in yields.”
Economist Mohamed A El-Erian said that, beyond the bond market reaction to push down longer-term borrowing costs, the move by the Trump administration could be part of a broader strategy to maintain control of interest rates, known as “yield curve control”.
While the move can help bring down longer-end yields in the immediate and short term, thereby lowering mortgage and other borrowing costs, “it risks collateral damage and unintended consequences”, he added in a social media post.
The amount the US owes compared with its annual economic output, known as its debt-to-gross domestic product (GDP) ratio, is 125.8%, according to the International Monetary Fund (IMF).
It is one of the highest ratios among the world’s largest economies.
IMF figures show the UK’s debt-to-GDP ratio at 103.6% and China’s at 106.9%.
Japan has the highest debt burden among the world’s major economies, with a debt-to-GDP ratio of more than 200%.
The US has longer-term fixed mortgage deals than countries such as the UK.
The average interest rate on 30-year fixed mortgages is currently 6.67%, according to finance firm Freddie Mac. Borrowing costs for homeowners have been rising, but remain below 2023 levels, when such deals averaged 7.7%.
Minutes released on Wednesday by the Federal Reserve, which sets US interest rates, showed that concerns over inflation had deepened among policymakers at its last meeting.
The minutes said there were “several participants” in favour of increased rates last month. The central bank held its benchmark interest rate in the current 3.50%-3.75% range for the fifth consecutive time.
Many participants also said rate hikes would “likely be necessary if inflation did not decline”, while some suggested interest rates were not high enough to bring price rises back to the Fed’s 2% inflation target.
The Fed is expected to hold its policy rate steady again at its September meeting after recent data showed inflation had eased slightly and firms unexpectedly shed jobs in July.
Faridah Abdulkadiri
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