"According to the latest projections from the Congressional Budget Office, publicly held debt is currently at $31 trillion and is about 100% of GDP. By fiscal year 2030, debt is expected to exceed the 106% record set after World War II, then surge to 120% by 2036. Fueling that accumulation are annual debt interest costs, which will more than double from today's levels to $2.1 trillion by 2036, taking up a greater share of federal spending and further accelerating budget deficits."
"A key driver in interest costs is the yield on bonds the Treasury Department issues to finance America's massive debt and deficits. After years of ultra-low rates, the yield has been climbing amid previous Federal Reserve rate hikes, the unsustainable trajectory of borrowing, and concerns the Trump administration has made the U.S. less reliable in global finance. The CBO's forecast shows the economy will expand slower than its prior view, with nominal GDP growth (unadjusted for inflation) cooling from 4.1% in 2025 to 3.9% in 2026 and 3.8% in 2027."
"Meanwhile, the Treasury Department issues debt across a range of maturities and yields. The average interest rate it pays is currently 3.316%. CBO sees the rate rising to 3.4% this year and continue to increase, reaching 3.9% in the final years of its projection period, which goes to 2036. The rising average interest rate will account for about half of the increase in interest costs over the next decade. "CBO's latest baseline shows an unsustainable fiscal outlook, with debt approaching record levels, deficits remaining elevated at more than twice a reasonable target, and interest costs exploding," the Committee for a Responsible Federal Budget said in a note on Wednesday."
The Congressional Budget Office projects publicly held federal debt at $31 trillion, roughly 100% of GDP, rising above the 106% World War II record by fiscal 2030 and to 120% by 2036. Annual net interest costs will more than double to $2.1 trillion by 2036, consuming a larger share of federal spending and widening deficits. Rising Treasury yields, earlier Federal Reserve rate hikes, sustained borrowing and concerns about U.S. financial reliability are pushing interest rates higher. Nominal GDP growth is projected to slow from 4.1% in 2025 to 3.8% in 2027. The average federal interest rate is expected to climb from about 3.316% to 3.9% by 2036.
Read at Fortune
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