U.S. Net Interest Costs Top $1 Trillion in Fiscal 2026
Net interest costs reached $1.05 trillion in the 12 months through September, while economists said conditions do not yet point to a debt crisis.
Key takeaways
- Net interest costs reached $1.05 trillion in the 12 months through September.
- The Peterson Foundation expects interest costs to reach 3.2% of GDP.
- Economists cited in the report do not see current conditions as a debt crisis.
The U.S. government’s net interest costs reached $1.05 trillion in the 12 months through September, a record for fiscal 2026, according to Treasury data. The bill was $970 billion in fiscal 2025.
The Peter G. Peterson Foundation expects interest costs to equal 3.2% of gross domestic product. If reached, that would exceed the previous record set in 1991. Fourth-quarter GDP data is expected in late October.
Rising debt and higher borrowing rates are driving the increase, the report said. A key measure of the debt stock has passed $32 trillion, about $10 trillion higher than five years ago. The average rate paid on marketable Treasury securities reached 3.52% at the end of September, up from 1.47% five years earlier.
New borrowing costs are higher still. A benchmark yield in Bloomberg’s index of U.S. Treasury securities was around 5%, adding to pressure on the budget, according to the report.
Economists cited in the report said conditions do not yet point to a debt crisis, noting that demand for Treasury securities remains strong and borrowing costs have not disrupted credit flows. Louise Sheiner, a Brookings Institution senior fellow and former Federal Reserve economist, described the risk as a gradual erosion of U.S. fiscal capacity. She said it is unclear when lenders might stop financing the country, a shift that could trigger a serious fiscal crisis.
This article was produced with the help of AI technology. Based on reporting by the outlets listed above.
