US National Debt Surpasses $40 Trillion, Global Markets Reel

The US national debt has surpassed $40 trillion, reaching 127% of GDP, and is growing by nearly $7 billion every day.

This translates to approximately $120,000 for every citizen of the US. The debt load is largely due to undeterred federal spending by both Republican and Democratic administrations, compounded by emergency economic stimulus packages, tax cuts, and statutory spending commitments.

The cost of servicing this mountain of accumulated debt is becoming increasingly alarming, with interest expenses rising 14% annually and forecasted to surpass $1 trillion for the first time in history in 2026. This means that the US is now spending more money on servicing its debt than it allocates to its military budget.

The recently-appointed Federal Reserve Chairman, Kevin Warsh, has struck a hawkish tone, pointing to possible interest rate hikes due to spiking energy costs and renewed inflation concerns. The first hike by 25 basis points was unanimously approved by the members of the Federal Open Market Committee on Wednesday, marking the first such increase in more than three years.