United State’s national debt has surged beyond $40 trillion for the first time, intensifying concerns over the health of the world’s largest economy as investors confront rising borrowing costs, persistent inflation and growing government deficits.
Treasury data showed that total US government debt reached about $40.05 trillion on August 18, a figure that has more than doubled from roughly $19.95 trillion when Donald Trump first entered the White House in January 2017.
The milestone comes at a particularly difficult time for financial markets. US government bonds, traditionally regarded as among the safest assets in the world, have faced heavy selling this week, pushing long-term yields sharply higher. The yield on the 30-year Treasury briefly climbed to 5.34 per cent, its highest level since 2007, before falling after the Treasury announced plans to increase its bond buyback operations.
Treasury Secretary Scott Bessent said the government would at least double the size of planned buybacks of longer-dated Treasury securities, raising individual operations from $2 billion to at least $4 billion. The programme is designed to improve liquidity and ease pressure in the bond market, with the larger purchases scheduled to begin in September.
The announcement initially calmed investors, with the 30-year yield falling towards 5.18 percent. But the relief proved temporary. By Friday, the yield had moved back towards 5.27 percent, suggesting that investors remain concerned about the deeper fiscal problems behind the market turmoil.
Economists and market analysts say the buybacks can provide temporary support but cannot solve the underlying problem of persistent budget deficits. The United States is borrowing heavily because government spending continues to exceed tax revenues, while interest payments on existing debt are becoming an increasingly significant burden.
The debt surge has been driven by a combination of factors, including pandemic spending, infrastructure investment, tax reductions, defence spending and rising costs for major social programmes. Interest payments themselves are now placing additional pressure on government finances, creating a cycle in which more borrowing can lead to higher interest costs.
The consequences extend beyond Washington. Higher Treasury yields can feed through into mortgage rates, business borrowing and other consumer loans because US government bonds help set the benchmark for borrowing costs across the economy.
The turmoil is also being felt internationally. UK government bonds have faced pressure as investors reassess inflation, government borrowing and global interest rates. For markets, the $40 trillion milestone is therefore more than a symbolic figure. It is a warning that America’s fiscal choices are increasingly becoming a global financial concern.
