WASHINGTON: US national debt has surpassed USD 40 trillion, doubling in roughly a decade as higher interest rates push up borrowing costs and intensify concerns about the fiscal outlook.
The debt stood at just under USD 20 trillion at the start of Donald Trump’s first presidential term.
Meanwhile, the Joint Economic Committee estimates that the total is now increasing by about USD 90,000 per second, or roughly USD 7.8 billion per day.
Economist Mohamed A. El-Erian, a professor at the Wharton School, said government interest payments are 15% higher than a year earlier. He added that those payments now consume almost 20% of tax revenue.
Eric Swanson, a University of California economics professor and former Federal Reserve economist, said long-term US interest rates are at multi-decade highs. He linked part of that pressure to concerns over heavy federal borrowing.
US debt is about 126% of GDP. However, that ratio remains below levels in Japan and Italy.
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The Congressional Budget Office forecasts debt could reach about USD 64 trillion by 2036, according to the report. Higher federal borrowing costs can also feed into mortgages, car loans and credit cards, El-Erian said.
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The US Treasury recently bought back government debt to support bond demand, but the decline in long-term borrowing costs proved short-lived.
