US debt tops $40 trillion amid concern over borrowing costs
Gross federal debt now amounts to 124% of GDP, as the 30-year Treasury yield trades at its highest level in two decades
Donald Trump likes to boast about the health of the economy. He prides himself on the claim that under his administration the United States is the world’s “hottest” economy, even as the data begin to undermine that narrative. On Tuesday, gross U.S. public debt surpassed the $40 trillion mark, according to the Treasury Department’s daily financial report.
The figure comes amid growing concerns about rising financing costs for the economy, with 30-year bond yields hitting highs not seen in nearly two decades. The yield on those long-term securities has climbed to 5.3%, the highest level since 2007, driven by doubts that the Trump administration can rein in inflation and curb the public deficit, as well as the frenzy around artificial intelligence (AI), which is prompting big tech companies to take on more debt.
The budget deficit has worsened since Trump returned to the Oval Office. The U.S. government has sharply increased spending because of the war with Iran, while revenues have fallen due to tariff refunds and the tax cuts for businesses and wealthy individuals included in the One Big Beautiful Bill Act (OBBBA), which Trump pushed through shortly after returning to the White House for his second term. The budget shortfall is expected to exceed $2 trillion this year, or nearly 6% of GDP.
The United States has never owed so much money. The exact figure stands at $40,047,425,768,420. According to the department headed by Treasury Secretary Scott Bessent, “the total amount of outstanding borrowing by the U.S. Federal Government accumulated over the nation’s history.”
In other words, the sheer size of the debt cannot be blamed solely on Trump. It also rose rapidly during Joe Biden’s presidency. The Democrat launched massive spending and investment programs to support the economy during the Covid-19 crisis and the subsequent inflationary surge, both of which contributed to higher borrowing.
“Forty trillion of debt doesn’t exist solely on the government’s ledgers; it is felt throughout the economy and finds its way to the pocketbooks of people one way or another,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a nonpartisan organization.
“The more we borrow, the more we exacerbate inflation, squeeze out other priorities in the budget, and leave ourselves vulnerable to emergencies at home and turmoil abroad,” MacGuineas said.
Debt level: 124% of GDP
The headline figure alone is of limited value. To assess its significance, it is typically compared with the size of the economy. Gross debt amounts to 124% of U.S. GDP, the highest level since at least World War II.
Moreover, the $40 trillion figure refers to gross debt, which includes both debt held by the public and intragovernmental debt. To gauge a country’s fiscal health, analysts, economists and international institutions generally focus on debt held by investors, which in the United States totals $37.64 trillion, equivalent to 99% of GDP. The remainder, about $7.7 trillion, consists of obligations held by federal trust funds and other government accounts.
For comparison, Spain’s equivalent public debt stands at €1.5 trillion, representing 89% of GDP.
The rapid growth of U.S. debt has become a growing concern among analysts. The cost of servicing the federal debt is expected to reach $1.4 trillion this year and is projected to surpass Social Security within two years as the government’s largest expenditure.
The situation is fueling investor concerns, prompting them to demand higher returns on Treasury securities to finance the U.S. government. On Wednesday, Bessent announced that he would double Treasury buybacks in secondary markets in an effort to inject liquidity into the financial system and reduce borrowing costs, which ultimately feed through to mortgage rates and the interest charged on car loans and student loans used by U.S. households.
For that reason, Trump has spent months pressuring the Federal Reserve to cut interest rates. On Wednesday, he again had a message for Fed Chair Kevin Warsh: “ Now, when we announce good numbers, which we’re doing all the time, they keep driving the interest rates up because they’re so afraid of inflation,” said Trump, referring to rising bond yields. “And they shouldn’t be. They should allow interest rates to go down.”
Asked by reporters about the rise in bond yields, Trump added: “Every time we do great, we announce great numbers and the interest rates go up. And they go up because they want to stop inflation. They should go down because the country’s strong.”
Concern over the trajectory of U.S. debt is not new. Earlier this year, the Congressional Budget Office (CBO), the body responsible for assessing the sustainability of federal finances, warned of the risks in February. “Our budget projections continue to indicate that the fiscal trajectory is not sustainable,” said CBO Director Phillip Swagel.
The report added: “From 2026 to 2036, large and growing deficits cause debt to increase. Federal debt held by the public rises from 101% of GDP this year to 120% in 2036, surpassing its previous high of 106% of GDP in 1946,” immediately after the end of World War II.
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