US debt has surpassed $40 trillion for the first time, according to data released on Wednesday by the US Treasury, as borrowing costs continue to rise.
Following the latest issuance of securities on Tuesday, the US federal government’s debt stood at $40.047 trillion.
The increase has been driven by borrowing linked to healthcare and social security spending, as well as the rising cost of servicing existing debt.
Debt rises faster than expected
The increase has come faster than previously expected. The Congressional Budget Office (CBO) had forecast that US debt would reach $39.4 trillion by the end of this year.
The deficit has also been deepened by the repayment of tariff revenues collected from companies following a Supreme Court ruling in February that struck down a large portion of the tariffs.
The debt-to-GDP ratio has reached around 125% and continues to rise despite ongoing economic growth in the world’s largest economy.
Borrowing costs add to pressure
The continued rise in US debt comes as borrowing costs have reached levels not seen since the financial crisis in recent years.
At that time, US debt stood at just over 64% of GDP, according to Federal Reserve data.
The US government has not recorded a balanced budget since the beginning of the century. The deficit has ranged between 5.2% and 6.2% of GDP over the past four years.
In 2020, during the COVID-19 pandemic, the deficit reached as high as 15% of GDP, according to Federal Reserve figures.
Annual deficit reaches $2 trillion
The federal government’s current rate of deficit growth is “unsustainable”, according to Jessica Riedl, a budget expert at the Brookings Institution.
She estimates that the annual deficit has reached around $2 trillion in recent years.
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