The US debt has crossed $40 trillion for the first time, putting renewed focus on federal deficits, higher interest costs and Treasury yields. The milestone does not mean an immediate debt crisis, but it highlights how rapidly Washington’s borrowing burden is growing.
Why US debt keeps rising
The United States’ gross national debt reached about $40.05 trillion at the close of business on Tuesday, August 18, according to US Treasury Department data. Of that total, roughly $32.27 trillion was debt held by the public, while about $7.78 trillion represented intragovernmental holdings.
The government borrows when federal spending exceeds revenue, and that gap has remained unusually large even outside a recession. The Congressional Budget Office projects a fiscal 2026 deficit of about $1.9 trillion, equal to 5.8% of GDP. CBO expects debt held by the public to reach about $32.1 trillion at the end of the fiscal year.
Long-term pressures include Social Security, Medicare, defense spending and interest payments. Recent tax and spending legislation has also influenced the trajectory, while costs linked to the Iran conflict have added another source of fiscal pressure.
Higher interest costs increase the burden
The debt milestone arrived during a sharp selloff in long-term US government bonds. The 30-year Treasury yield climbed above 5.3% on August 18, reaching its highest level since 2007 as investors reacted to inflation concerns, geopolitical risk and the amount of government borrowing coming to market.
That matters because Washington must continually refinance maturing debt. When yields rise, new borrowing becomes more expensive, increasing the amount of federal revenue devoted to interest rather than programs, infrastructure or tax relief.
Interest expenses have already become one of the largest components of the federal budget. Rising Treasury yields can also spill into the wider economy because government bond rates influence mortgages, corporate borrowing and other forms of credit.
Treasury moves to calm bond markets
The Treasury Department responded to pressure in longer-dated bonds by increasing planned buyback operations. Treasury Secretary Scott Bessent announced that certain repurchases of 10- to 30-year securities would double from $2 billion to at least $4 billion per operation.
The announcement helped push the 30-year yield down from its 19-year high, although the measure does not reduce the underlying national debt. It is mainly intended to support market liquidity and ease stress in parts of the Treasury market.
The episode shows why markets increasingly focus not only on how much the US owes, but also on the cost of financing that debt.
Is $40 trillion a debt crisis?
Crossing $40 trillion is psychologically significant, but the number alone does not mean the United States is facing an immediate sovereign debt crisis.
Economists generally place greater emphasis on debt held by the public and debt relative to GDP because those measures better reflect the borrowing burden carried by financial markets and the wider economy.
CBO projects debt held by the public at about 100.6% of GDP in fiscal 2026 and expects that ratio to continue rising over the next decade under current-law assumptions.
The concern is therefore less about one round number and more about direction. Persistent deficits near $2 trillion, rising mandatory spending and higher interest costs leave Washington with less flexibility when the next recession, war or financial shock arrives.
The $40 trillion milestone is best viewed as a warning rather than a crisis point. The US can still finance its obligations, but the combination of large deficits and expensive borrowing means policymakers have less room to ignore the long-term fiscal imbalance.
