Economists Warn $40 Trillion US Debt Is Unsustainable as Spending and Interest Costs Climb
Updated
Updated · South China Morning Post · Aug 24
Economists Warn $40 Trillion US Debt Is Unsustainable as Spending and Interest Costs Climb
3 articles · Updated · South China Morning Post · Aug 24
Summary
$40 trillion in US national debt, reached last week, has sharpened economists' warnings that growth alone cannot stabilize federal finances.
High spending, rising debt-servicing costs and tax cuts are the main obstacles, with Natixis economist Alicia Garcia-Herrero saying the US has 'no chance' of growing out of the problem through growth only.
The skepticism comes after Treasury Secretary Scott Bessent argued the debt path is manageable because spending has funded factories and equipment and the economy can 'grow our way out of' it.
US debt has doubled in a decade and risen by $10 trillion since 2022, underscoring how even strong nominal growth has failed to stop borrowing from climbing.
With the national debt crossing $40 trillion, could AI-driven productivity truly save the economy before a self-fulfilling financial crisis strikes?
As interest payments consume massive budget portions, what hidden financial sacrifices will ordinary citizens soon face to prevent a fiscal collapse?
If foreign demand for US Treasuries continues to soften, what unexpected global asset might become the ultimate safe haven for investors?
Crossing $40 Trillion: The U.S. Debt Explosion, Its Consequences, and the Road to Recovery
Overview
In August 2026, the U.S. national debt surpassed $40 trillion, a result of decades of spending more than the government collected. To fund this, the government issued more Treasury bonds, which led creditors to demand higher interest rates. This drove up the cost of borrowing for both the government and consumers, making mortgages, auto loans, and credit cards more expensive. As interest payments consumed a growing share of federal revenue, less money was left for essential services. Rising costs and squeezed budgets have made homeownership harder for young Americans, forced older generations to worry about retirement security, and increased tensions between age groups. Policymakers are now considering bipartisan reforms and a 3% deficit target to put the nation on a more stable path.