Four months into fiscal year show heavy borrowing
The first four months of fiscal year 2026 have added substantial pressure to U.S. public finances. According to the Congressional Budget Office, the federal government recorded a deficit of $696 billion between October and January. January alone accounted for $94 billion, bringing the average weekly borrowing since the fiscal year began to roughly $43.5 billion.
The continued gap between government spending and revenue generation underscores persistent structural imbalances. As expenditures outpace income, additional borrowing becomes necessary, further increasing the national debt burden.
Interest costs approach historic highs
The growing debt carries mounting interest obligations. Total U.S. national debt now exceeds $38.5 trillion, compared with an economy valued at approximately $31 trillion. Treasury data indicates that by January 31, interest payments had already reached $427 billion for the fiscal year.
If current trends continue and borrowing expands further, annual interest expenses are projected to reach around $1 trillion again. This threshold was first crossed in fiscal year 2024, when interest payments totaled $1.13 trillion, and climbed further to $1.22 trillion in fiscal year 2025.
Fiscal watchdogs warn that sustained borrowing at this pace could push the annual deficit toward $1.8 trillion or beyond. Analysts argue that without policy changes, record-high deficits and debt levels may become entrenched.
Markets show little alarm
Despite the scale of borrowing, financial markets have not signaled panic. Long-term Treasury yields remain relatively stable. Thirty-year Treasury bonds trade near 4.8 percent, while 10-year yields hover around 4.2 percent, levels broadly consistent with much of last year.
Typically, surging yields would indicate investors demanding higher compensation for increased fiscal risk. Conversely, falling yields might suggest bond supply outpacing investor demand. Neither dynamic has materialized in a disruptive way.
Possible policy responses
Economists suggest several tools that could be used if fiscal stress intensifies. Authorities could rely on financial repression, requiring institutions to hold greater amounts of government debt. Another possibility would be allowing inflation to drift modestly higher, reducing the real burden of debt over time. Quantitative easing, expanding the money supply to lower borrowing costs, remains another lever.
Such policy flexibility may help explain continued investor confidence. Still, if economic growth fails to outpace debt accumulation, more federal resources will increasingly be directed toward servicing interest costs rather than public investment.
Observers warn that prolonged imbalances could strain future budgets, as debt servicing consumes a growing share of government spending.
