EL7.AI
Macro EconomyMedium•29 October 2026•
4 min read

U.S. Debt at 99% of GDP in 2025, Forecast to Reach 101% in 2026

Key Facts

1Federal debt held by the public stood at 99% of GDP at the end of fiscal 2025, compared with a historic peak of 106% in 1946.
2The Congressional Budget Office forecast debt held by the public would reach 101% of GDP in 2026 and 120% in 2036.
3The Congressional Budget Office estimated the fiscal 2026 deficit at about $1.9 trillion, or 5.8% of GDP, compared with a historical average of 3.8%.
4Real GDP grew at an annual rate of 3.4% in the third quarter of 2026, following 2.2% growth in the second quarter.

Federal debt held by the public stood at 99% of gross domestic product at the end of fiscal 2025, according to Treasury Department data, while the Congressional Budget Office forecast it would rise to 101% in 2026. That means reaching 100% in 2026 remains a forecast, not an actual result confirmed at the end of the fiscal year. The ratio measures debt held by the public against the size of the economy and differs from total federal debt. The Treasury said the ratio reached a historic peak of 106% in 1946, after wartime spending and borrowing pushed debt to that level. The Congressional Budget Office expects the ratio to exceed that peak over the coming years.

According to the Congressional Budget Office’s projections, debt held by the public will rise to 120% of GDP in 2036, exceeding the 1946 level. That trajectory is tied to a large and growing deficit: the office estimates the fiscal 2026 deficit at about $1.9 trillion, or 5.8% of GDP. That compares with an average deficit of 3.8% of GDP over the past 50 years. These estimates show the projected fiscal gap widening relative to its historical average; they are not a final tally for the fiscal year. Debt and deficit projections put government borrowing pressure in a broader fiscal context than the ratio alone.

The Congressional Budget Office expects federal spending to reach 23.3% of GDP in 2026, then rise to 24.4% in 2036. The office said increased spending on Social Security and Medicare, along with rising net interest costs, would drive that trajectory. A decline in discretionary program spending is expected to partly offset those increases. The spending ratio is projected to remain near its 2026 level through 2028 before rising later. Entitlement programs and interest therefore stand out among the factors the office expects to push spending higher relative to the size of the economy.

In contrast, the Bureau of Economic Analysis’ preliminary estimate showed real gross domestic product grew at an annual rate of 3.4% in the third quarter of 2026, following growth of 2.2% in the second quarter. The reading exceeded EL7’s forecast of 3.2%. The 3.4% rate is an annualized pace based on the quarterly change, not growth of that magnitude over the quarter alone. The Bureau of Economic Analysis said an acceleration in investment and a rebound in government spending contributed to growth. Those gains were partly offset by a decline in exports, while imports increased at a faster pace than in the previous quarter.

The Personal Consumption Expenditures price index excluding food and energy rose at an annual rate of 2.5% in the third quarter, compared with a 3.3% increase in the second quarter, according to the Bureau of Economic Analysis. In the latest monthly reading available before the GDP release, the core index was up 3.0% from a year earlier in August and 0.2% from the previous month. The figures differ by period and comparison method: the third-quarter reading is annualized, while the August readings measure the change over 12 months and the monthly change. These readings place price trends alongside GDP growth in the latest available economic activity data. The Bureau of Economic Analysis had set November 25, 2026, as the release date for its second estimate of third-quarter GDP and corporate profits.

Total nominal debt reached a record $40 trillion in August 2026, according to the Associated Press, after reaching $39 trillion in March and $38 trillion in October 2025. These figures measure total debt in dollars and do not represent debt held by the public as a share of GDP. A White House spokesman said the administration is focused on reducing waste, fraud and abuse in federal spending, as well as accelerating economic growth, to improve the debt-to-GDP trajectory. The report cited the Bipartisan Policy Center’s estimate that the United States could reach the $41.1 trillion debt ceiling between late winter and mid-summer 2027. Reaching the ceiling could require a new vote in Congress, the report said.