The United States national debt has now surpassed $40 trillion, a significant milestone for the world's largest economy. This figure represents a doubling of the national debt in the decade since the beginning of 2016, when it stood at just under $20 trillion.
The debt is reportedly increasing by approximately $90,000 every second, or $7.8 billion per day, according to the Congress Joint Economic Committee.
Economists point to the current environment of multi-decade high interest rates as a key concern. "What's very different now compared to a decade ago is the level of interest rates," stated Eric Swanson, professor of economics at the University of California and a former senior economist at the Federal Reserve. He noted that a portion of these high long-term interest rates is attributable to inflation concerns, while another part stems from anxieties about the extreme levels of U.S. government borrowing.
The bond market is consequently demanding higher returns. Investors are reportedly wary of both the sheer scale of the U.S. debt and increased competition for capital from technology firms borrowing substantial amounts to invest in artificial intelligence.
"What happens when interest rates go up is that the funding of the deficit becomes more expensive," explained economist Mohamed A. El-Erian, a professor at the Wharton School. Interest payments on government debt have risen by 15% compared to the same period last year. El-Erian added that these payments now constitute almost 20% of tax revenue, a figure larger than the defense budget.