US Deficit Still High
The U.S. government ran a $1.6 trillion rolling 12-month deficit through February, with a $308 billion shortfall last month alone. Persistent fiscal gaps add complexity to future rate and spending decisions, especially as borrowing costs rise.
The US national debt is projected to reach $40 trillion by 2026, fueled by rising government spending and interest obligations. Interest payments could exceed $2 billion a day, limiting investments in infrastructure, healthcare, and education. The federal debt was $38.4 trillion as of January 12, 2026. The debt ceiling, the total amount the U.S. government is authorized to borrow, was set at $41.1 trillion in July 2025. The "One Big Beautiful Bill Act" included a $5 trillion increase in the debt ceiling, expected to last until 2027. The Congressional Budget Office (CBO) estimates the 2026 deficit will be $1.9 trillion. They project debt will rise to 120% of GDP by 2036. Rising net interest costs are a major driver. The federal deficit totaled $1 trillion in the first five months of fiscal year 2026. Revenues rose by 11% due to higher income tax and tariff collections, while outlays increased by 2%. Spending increases were driven by mandatory spending and interest payments on the debt.
