US Federal Debt Interest Cost Hits Record $1.38 Trillion Annualized
Annualized interest expense on US federal debt reached a record $1.38 trillion, equal to 4.2% of GDP and the highest share since 1997.
US federal debt servicing costs have climbed to an all-time high. Annualized interest expense is now estimated at $1.38 trillion, according to The Kobeissi Letter.
That equals 4.2% of US GDP, the highest percentage since 1997. For comparison, the ratio was 2.3% in the fourth quarter of 2020.
The increase has been rapid. Over the past five years, annualized interest expense has risen by roughly $900 billion, or nearly 200%, averaging about 24% annual growth. In the first nine months of fiscal 2026, interest expense rose $78 billion year over year to $827 billion, also a record for that period.
The figures highlight the growing burden of debt service as higher rates and a larger debt stock push financing costs to unprecedented levels.
Source: The Kobeissi Letter