Debt Growth May Overtake U. S. Economy

The United States is approaching a point where the money it borrows could cost more than its economic output.
Treasury bonds now average 3.3 % in interest, projected to climb nearly 4 % by 2036—doubling the interest bill from today’s $1 trillion to roughly $2.1 trillion.

Debt vs. GDP

• Debt already equals GDP (~$31 trillion).
• By 2030 it could exceed 106 % of GDP; by the mid‑2030s, around 120 %.

Slower Growth, Rising Costs

The Congressional Budget Office projects:

• Nominal GDP growth falling from 4.1 % (2025) to just under 3.8 % (2027).
• Interest rates outpacing growth → a potential “debt spiral.”

“A debt spiral can begin: more money is needed to pay interest, which forces higher borrowing and so on.” – Watchdog group

Political & Fiscal Implications

• Supreme Court decisions on President Trump’s tariffs could sharply cut revenue, forcing even more borrowing and tightening the bond market.
• Politicians claim stronger growth can keep debt in check, but rising interest costs threaten to push debt into “escape velocity.”

The Role of AI

• Treasury models estimate AI could add a tiny productivity boost (~1 % output by 2036).
• Even with AI, the debt‑to‑GDP ratio could still climb above 120 %.

Bottom Line

Unless the economy grows faster or interest rates stay low, debt could outpace growth and trigger a fiscal crisis.