US Debt Surpasses $40 Trillion, Raising Fresh Economic Concerns

The United States’ national debt has surpassed $40 trillion for the first time in history, according to the US Treasury Department.

The rapid increase has renewed concerns about the country’s long-term financial stability, with economists warning that continued borrowing, higher government spending and tax cuts could put increasing pressure on the US economy.

US debt has doubled since January 2017, when it stood at about $19.95 trillion. Since President Donald Trump returned to office in January 2025, the debt has increased by approximately $3.8 trillion.

Several factors have contributed to the rise, including spending during the COVID-19 pandemic, tax cuts, healthcare and pension obligations, defence spending and rising interest costs.

The US now spends about $1.1 trillion annually on interest payments, slightly more than its defence spending. The Congressional Budget Office estimates that federal debt could rise from about 101 percent of GDP in 2026 to 120 percent by 2036.

Who does the US owe?

About 80 percent of the US gross debt, roughly $32 trillion, is publicly held by domestic and foreign investors.

Major domestic holders include the Federal Reserve, mutual funds, pension funds, banks, state and local governments, corporations and individual investors.

Foreign holders also account for a significant share of US debt. In 2025, the US owed approximately $1.2 trillion to Japan, $889 billion to the United Kingdom and $683 billion to China.

Why does it matter?

Economists warn that continued debt accumulation could lead to higher interest rates, slower economic growth and increased inflationary pressure. Rising interest payments could also leave the government with less money for public services and other priorities.

Experts say addressing the problem could eventually require difficult decisions, including reducing government spending, increasing taxes or reforming major social programmes.

Because the US economy plays a central role in global markets, a serious American debt crisis could also have consequences for economies around the world.

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