The U.S. National debt reached $38.51 trillion at the end of 2025, marking the highest level since the initial surge during the COVID-19 pandemic, according to data released Friday. The debt grew by $2.30 trillion over the course of the year, a 6.3% increase, fueled by a rapid acceleration in borrowing following the resolution of the debt ceiling impasse in July.
The surge in debt occurred despite a period of economic growth, with current-dollar GDP increasing by 5.6% over the same period. However, the debt outpaced GDP growth, resulting in a rise in the debt-to-GDP ratio to 122.3% in the fourth quarter – the highest reading since the first quarter of 2021. This ratio, calculated by dividing the total Treasury debt by the annual rate of current-dollar GDP, provides a key indicator of the nation’s fiscal health.
The increase was particularly pronounced in the latter half of the year. After being constrained by the debt ceiling for six months, the government issued a “tsunami of debt” totaling $2.3 trillion, with $877 billion added in the final quarter alone. This rapid accumulation of debt reflects the government’s need to finance its operations and respond to economic pressures.
The $38.51 trillion in outstanding debt is comprised of approximately $28.84 trillion in Treasury securities traded on the market and $7.38 trillion held by government pension funds, including the Social Security Trust Fund. These internal holdings represent obligations to beneficiaries and are not subject to market fluctuations.
The rising debt-to-GDP ratio is a concern because it indicates a growing leverage for the government and a potentially increasing burden on the economy. While economic growth generates tax revenues needed to service the debt, a situation where debt grows faster than the economy can exacerbate the challenge. The current trend suggests that the U.S. Is facing a more leveraged fiscal position.
The U.S. Government sold $701 billion of Treasury securities this week, according to Wolf Street, including $160 billion in notes and bonds. Yields on these securities have seen slight fluctuations, with the 10-year Treasury yield at 4.177% and the 30-year yield at 4.750% at auction. The yield on the 13-week Treasury bill rose to 3.60%, suggesting the market does not anticipate a rate cut within the next three months.
Further analysis of the relationship between government interest payments, tax receipts, and the debt-to-GDP ratio is expected next month, building on data from the third quarter of 2025. The Treasury debt has spiked by 88% in the last seven years, reaching $38.74 trillion as of Friday.
