US Could Soon Enter A ‘Debt Spiral’, Exceeding Post-World War II Debt-To-GDP Record By 2030, Watchdog Says

The U.S. is approaching a critical fiscal point as its federal debt is projected to surpass historical levels, raising alarms about the country’s economic stability.

The U.S. federal debt is on track to surpass a significant milestone, with projections indicating a troubling fiscal future. The Congressional Budget Office (CBO) reports that publicly held debt stands at $31 trillion, equating to roughly 100% of the nation’s GDP.

By 2030, the debt is expected to exceed the post-World War II record of 106% and could reach 120% by 2036. This increase is driven by rising annual interest costs, which are projected to more than double to $2.1 trillion by 2036, further straining federal budgets and increasing deficits.

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“CBO’s latest baseline shows an unsustainable fiscal outlook, with debt approaching record levels, deficits remaining elevated at more than twice a reasonable target, and interest costs exploding,” the Committee for a Responsible Federal Budget said in a note on Wednesday.

“Later in the decade, under CBO’s baseline, the average interest rate on all federal debt will exceed nominal economic growth, which could represent the start of a debt spiral.”

The Treasury Department is experiencing higher bond yields, influenced by previous Federal Reserve rate hikes and concerns over the U.S.’s global financial reliability. The average interest rate on federal debt is currently 3.316% and is expected to rise to 3.9% by 2036.

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The Committee for a Responsible Federal Budget warns of an unsustainable fiscal path, with debt potentially reaching 131% of GDP by 2036 if certain tariffs are deemed illegal. This scenario could lead to a debt spiral and a heightened risk of fiscal crisis.

The rising U.S. debt has been a growing concern among economists and policymakers. Richard Haass, president of the Council on Foreign Relations, has warned that the $38 trillion national debt poses a significant threat to the country’s security and global standing, potentially leading to a “national security crisis.”