American Debt Trajectory Raises Long Term Risks
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The United States has just crossed a historic threshold. Indeed, their debt now exceeds the size of their economy. This shift fits into a sustainable trajectory marked by repeated deficits and postponed budget decisions. Despite these imbalances, market confidence remains intact, revealing growing tension between the perceived strength of the world’s leading power and the reality of its public finances.
In Brief
- The United States crosses a historic threshold with debt now exceeding the size of their economy, revealing an unprecedented imbalance outside of a major crisis period.
- American public finances are sinking into a persistent deficit dynamic, fueled by high structural spending and a growing cost of interest.
- Long-term projections indicate a continuing worsening, with debt potentially reaching even higher levels in the coming years.
- Despite these signals, markets maintain their confidence, creating a marked contrast between the perceived strength of the United States and the reality of its public finances.
Debt Now Exceeds the American Economy
American public debt has reached an unprecedented milestone by hitting 100.2% of gross domestic product, which equals 31,270 billion dollars of debt versus 31,220 billion GDP. This level has not been seen since World War II, but in a radically different context.
Thus, the United States now lives “beyond its means,” in a context marked by a “bipartisan abdication of difficult choices,” according to Maya MacGuineas.
Here are some key figures :
- Total debt : 31,270 billion dollars ;
- GDP : 31,220 billion dollars ;
- Debt-to-GDP ratio : 100.2 % ;
- Projected deficit for 2026 : 1,900 billion dollars (5.8 % of GDP) ;
- Debt interest : potentially more than 1,000 billion dollars per year.
In detail, American public finances remain characterized by high and persistent deficits. This dynamic is explained by significant structural spending, notably in pensions and health care, coupled with the growing burden of debt servicing. The rapid increase in interest gradually reduces budgetary maneuvering room and reinforces the sustainable nature of the imbalance.
A Trajectory Considered Concerning by Markets and Agencies
Beyond the current observation, medium-term projections map an even more worrying trajectory. American debt could reach 118% to 120% of GDP by 2035-2036, confirming the establishment of a lasting imbalance.
This evolution triggers reactions from rating agencies. Fitch mentions a “long-term deterioration” of public finances, while Moody’s downgraded the American rating in 2025.
In an out-of-control American debt context, bitcoin stands as a credible monetary alternative, offering a decentralized store of value against state budgetary excesses.
Some recent political choices also feed this dynamic. The tax reform under Donald Trump is expected to add 4,700 billion dollars to the debt, while a Supreme Court decision could result in a loss of 1,700 billion in tax revenues.
These elements reinforce the idea of a trajectory that is hard to reverse in the short term, even as the United States continues to benefit from a major advantage: the central role of the dollar and the depth of its financial markets.
This contradiction feeds a paradox. Despite a critical budget situation, the United States retains the confidence of international investors. This status could change if the current dynamic continues, opening the way to shifts in global capital flows and a gradual questioning of some financial balances established through dedollarization.
