A U.S. ‘debt spiral’ could start soon as the interest rate on government borrowing is poised to exceed economic growth, budget watchdog says

Core Insights - The U.S. federal debt is projected to reach $31 trillion, approximately 100% of GDP, with expectations to exceed 106% by 2030 and 120% by 2036 [1][2] - Annual debt interest costs are anticipated to more than double to $2.1 trillion by 2036, significantly impacting federal spending and exacerbating budget deficits [2][6] - The average interest rate on federal debt is expected to rise from 3.316% to 3.9% by 2036, contributing to increased interest costs [5][6] Debt and Economic Growth - The Congressional Budget Office (CBO) forecasts slower economic growth, with nominal GDP growth decreasing from 4.1% in 2025 to 3.8% in 2027 [4] - The rising interest costs may outpace economic growth, potentially leading to a debt spiral where interest rates exceed nominal GDP growth [6][7] - Lawmakers are concerned about the political implications of fiscal austerity, often relying on the hope of robust economic growth to manage U.S. debt in the long term [6]