According to data from the US Treasury, government debt held by the public stood at around $31.27 trillion as of Tuesday last week. At the same time, the US economy produced an estimated $31.22 trillion in nominal gross domestic product (GDP) over the 12‑month period from April 1, 2025, to March 31, 2026, based on new figures from the Commerce Department.
This means the government now owes more money to investors than the value of everything the country produces in a year. The gap between debt and economic output is expected to widen further in the coming years. The US is on course to exceed its previous record debt‑to‑GDP ratio of 106%, which was reached in 1946 after World War II.
So far in the current fiscal year, which began in October, the federal government has spent $1.17 trillion more than it has collected in revenue. The annual budget deficit is expected to rise close to $2 trillion in the months ahead.
The Congressional Budget Office (CBO) had earlier projected this outcome. It estimates that, without major policy changes, federal debt held by the public will rise to 120% of GDP by 2036 and 175% by 2056.
The CBO has identified rising spending on Social Security and Medicare, driven by an ageing population, as a key reason for the growing debt. Higher interest payments on existing debt have also played a major role.
Interest costs now account for 14% of total federal spending, exceeding defence expenditure. This means that more than one out of every seven dollars spent by the US government goes toward paying interest on its debt.
Meanwhile, total national debt — which includes money the government owes to itself — has reached about $38.95 trillion, or well over 120% of GDP.
The Trump administration has downplayed the ballooning debt since taking office, often saying that the debt-to-GDP ratio will drop as President Trump’s policies accelerate US economic growth.