People walk past a poster showing the U.S. national debt in Washington, DC, on August 19, 2026.
Mandel Gunn | AFP | Getty Images
According to the Treasury Department, government debt has exceeded $40 trillion, further exceeding the staggering threshold of deficits.
The total amount of IOUs in the U.S. reached $40.5 trillion as of Tuesday, nearly four and a half years after it topped $30 trillion. Economic stimulus during the coronavirus pandemic has widened the budget deficit for years, pushing public debt to nearly 100%.
In the latest monthly accounting of U.S. finances, the Treasury reported a $432.3 billion deficit in July, the highest monthly total since March 2021. The year-to-date shortfall is nearly $1.8 trillion, higher than the same period last year.
Ten years ago, the debt level was $19.4 trillion.
The U.S. fiscal situation has had an impact on the market, and this effect has been felt recently, likely leading the Treasury Department to announce on Wednesday that it would increase the size of share buybacks at the long end of the yield curve.
Treasury yields have risen sharply since late June, eventually reaching levels not seen since before the global financial crisis, when the Federal Reserve cut benchmark interest rates to near zero. The Fed also introduced an aggressive bond repurchase program in late 2008, which helped keep interest rates in check.
However, a surge in corporate bond issuance related to artificial intelligence investments, rising term premiums, concerns about the Federal Reserve’s efforts to fight inflation, and concerns about the state of the debt deficit are all tailwinds for yields.
The government sees borrowing costs rising as the Fed is reluctant to set interest rates without more information about inflation and the labor market. Debt interest this year will total nearly $1.2 trillion, making it the largest budget expense outside of Social Security and Medicare.
Correction: Total debt exceeded $40 trillion on Tuesday. The previous version had an error in the description of that day.
