(9 January 2026 – United States) Leading economists are alarmed by the mounting level of federal debt that poses a critical threat to US economic growth and stability.
With the Congressional Budget Office projecting a US$1.9 trillion deficit for the year and total debt reaching 100 percent of GDP, concerns are rising that the debt-to-GDP level could hit 118 percent by 2035.
As the debt load rapidly expands the interest payments the government must service have jumped to over US$1 trillion per year.
The long term risk posed by mounting federal debt represents a paramount problem facing the US economy. Those risks include the size of the debt prompting the central bank to keep rates low to minimise debt servicing costs as opposed to fighting inflation, a concept known as fiscal dominance.
Fiscal dominance is the point at which financing needs begin to constrain the central bank’s inflation fight, and the adjustment happens through the purchasing power of money rather than through taxes or spending cuts.
Experts warn that excessive debt levels increase the risk of negative economic outcomes if not addressed through effective fiscal policy.
“For most of American history, the US operated under the ‘Hamilton Norm’ that the expectation that any debt issued today would be fully financed by future tax surpluses. That norm died in 2020” said University of Virginia Professor Eric Leeper.
“The preconditions for fiscal dominance are clearly strengthening. Debt is on a steep upward trajectory toward 150 percent of GDP over the next three decades” former Treasury Secretary and Federal Reserve Chair Janet Yellen commented.