US federal debt surpasses $40 trillion for the first time

Published Aug 19, 10:01 PM UTC

On August 19, 2026, the US Treasury reported that federal debt exceeded $40 trillion for the first time, reaching $40.047 trillion. This milestone comes faster than the Congressional Budget Office's forecast of $39.4 trillion by year-end, driven by rising health and social security borrowing, higher interest payments, and inflation concerns linked to the Middle East conflict and energy prices. Long-term Treasury bond yields hit their highest since 2007, forcing the government to spend more on refinancing. The Treasury announced larger long-term bond purchases starting in September to ease rates. Experts note the deficit has widened to 6-7% of GDP, up from the 3-4% that once worried markets. Despite promises by former President Donald Trump and Treasury Secretary Scott Bessent to cut spending and reduce the deficit, factors such as Supreme Court-ordered tariff repayments, tax cuts, and military spending related to the Iran conflict have worsened the fiscal outlook. Debt now represents nearly 125% of GDP.

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