Debt Growth May Overtake U. S. Economy

The United States is heading toward a point where the money it borrows could cost more than its economic output. The Treasury issues bonds that pay interest, and those rates have climbed after the Federal Reserve raised rates. Now the average cost is about 3. 3 percent and is expected to reach nearly 4 percent by 2036, which will double the interest bill from today’s $1 trillion to roughly $2. 1 trillion. Debt itself is already equal to the country’s GDP, about $31 trillion. By 2030 it could top 106 percent of GDP, and by the mid‑2030s it may hit 120 percent. These numbers come from a new Congressional Budget Office projection that also shows the economy growing slower than earlier estimates – nominal GDP growth falling from 4. 1 percent in 2025 to just under 3. 8 percent by 2027.When the interest rate on national debt rises faster than the economy grows, a “debt spiral” can begin: more money is needed to pay interest, which forces higher borrowing and so on. A watchdog group warned that under the current path, the average rate could exceed growth later in the decade, sparking this risk. Politicians often argue that stronger economic growth can keep debt under control, but the current trend of rising interest costs threatens to push debt into “escape velocity. ”If the Supreme Court invalidates some of President Trump’s tariffs, revenue could fall sharply, forcing even more borrowing and tightening the bond market. Some experts say that advances like artificial intelligence could help. The Treasury’s model assumes AI will add a tiny boost to productivity, raising output by about one percent by 2036. Even with that help, the debt‑to‑GDP ratio could still climb to over 120 percent. The picture is a warning: unless the economy grows faster or interest rates stay low, debt could outpace growth and create a fiscal crisis.