U.S. Interest Costs Hit Record 3.3% of GDP

America’s debt burden is reaching a historic milestone.
U.S. federal net interest costs are now around 3.3% of GDP, surpassing the previous peak reached in 1991.
That makes interest spending the highest share of the economy recorded in federal data going back to at least 1940.
The pressure comes from both sides of the equation: a much larger stock of government debt and elevated borrowing costs as older, cheaper Treasury debt is refinanced at higher rates.
And the burden is projected to keep growing.
The Congressional Budget Office estimates net interest costs could rise to roughly 4.6% of GDP by 2036 under its baseline projections.
That means an increasingly large share of federal revenue will go toward servicing existing debt rather than defense, infrastructure or other government programs.
With Treasury yields already under pressure, America’s fiscal outlook is becoming an increasingly important risk for the bond market.