PolicyMarket noteTuesday 3 November 2026, 23:30
Interest on the national debt was 3.26% of GDP in fiscal 2026, above the 1991 record of 3.19% and up from 1.77% in 2019. The 2028 race starts here.
Interest on the national debt as a percent of GDP hit a record in fiscal 2026. The government paid $1,051.8bn in net interest in the year to 30 September, the Treasury’s final statement for the year shows. Against GDP of $32.2tn over the same four quarters, from the Bureau of Economic Analysis, that is 3.26% of GDP, above the previous record of 3.19% in 1991.
The record has a political echo. The last time interest took this much, in 1991, the 1992 presidential election made cutting the deficit a top-tier issue, as Axios Macro noted on 2 November. The midterm votes are still being counted, and the 2028 race starts with far less room to spend than the last two.
The figure is our calculation from official data, using the same method as the government’s own series: a fiscal year’s net interest over the average of GDP in its four quarters. For 1991 that is $194.4bn of interest on GDP of $6,093bn. Axios rounds both years to 3.2%; to two decimals, 2026 is the higher.
The share fell for a decade after 1991 and stayed low through the years of near-zero rates. It was 1.32% in 2010. In fiscal 2019 the government paid $376bn, its statement for that year shows, or 1.77% of GDP. The share has nearly doubled in seven years. Fiscal 2025 came within a whisker of the record, at 3.18%; net interest has since topped $1tn, as we reported on 18 October.
Two things push the bill up: how much the government owes and the rate it pays. Debt held by the public was $32.43tn on 30 September, Treasury figures show, about 98% of GDP. Seven years earlier it was $16.81tn, about 77%. The debt has almost doubled since 2019.
The rate has risen by less. The average interest rate on marketable Treasury debt was 3.518% in September, up from 2.436% in September 2019. That average moves slowly, because old bonds are replaced only as they mature. New money costs more: the 10-year Treasury yield was 4.95% on 3 November, Treasury data show, against an average of 2.14% in 2019, FRED’s daily series shows. As old debt rolls over, the average rate keeps catching up with that yield. This autumn’s bond sell-off was driven by real yields, as we wrote on 29 September.
The candidates in 2020 ran in a world of cheap borrowing. That world has gone, and some Democratic economists now say so openly. Mike Konczal, a former White House adviser, wrote that the economy has moved from too little demand to one where supply is “the limiting factor”, and that the deficit is “quite grim in a way I don’t think people appreciate”, in a recent essay. Zachary Liscow, a former chief economist at the White House budget office, argued that faster growth helps but cannot close the gap on its own, Axios reported.
Our view: each point of GDP spent on interest is a point not available for new programmes or tax cuts. At 3.26%, interest already costs more than the $965.2bn the government spent on national defence in fiscal 2026, the same statement shows, and it will keep rising as cheap debt is refinanced at today’s yields, unless those yields fall.
Consumer prices for October come on 10 November and the Fed decides on rates on 9 December; both move the yields at which new debt is sold. The Treasury’s statement for October, the first month of fiscal 2027, shows whether the interest bill is still growing.
This is analysis and opinion, not investment advice.
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