The rapidly increasing US national debt is causing growing nervousness in the global financial sector and among international capital market participants. Over the past ten years, the US debt has more than doubled from $18.2 trillion in 2015 to currently about $36.6 trillion. A recently passed law, known as the “One Big Beautiful Bill” or “Big Beautiful Bill Act,” could increase the debt burden by an additional $3 to $3.4 trillion by 2034.
Rising Interest Burden and Credit Rating Downgrade
This debt development leads to a rapidly increasing interest burden: For the year 2025, interest payments of about $794 billion are expected, with the possibility that this figure could soon exceed one trillion dollars per year. The high national debt and the persistently high budget deficit of five to six percent of Gross Domestic Product are considered unsustainable in the long run. Experts such as KfW Chief Economist Dirk Schumacher and economists at Goldman Sachs warn of the risks associated with this fiscal development. They view the US as being in a “non-sustainable position.”
The rating agency Moody’s downgraded the US creditworthiness from Aaa to Aa1 in May 2025. This step is a clear signal of growing concern regarding the financial situation and occurred due to a lack of political consensus on deficit reduction. The downgrade could lead to investors demanding higher returns for US Treasury bonds, further increasing the financing costs for the US budget.
Global Impacts and Investor Concerns
For global investors, this means increased uncertainty: US Treasury bonds, which were previously considered safe, are losing their appeal in the face of the rising debt mountain and growing fiscal risks. Short-term growth impulses from tax relief could reach a tipping point in the long run, where debt sustainability comes into question. This could have significant implications for international capital markets as well as potential distortions in the global financial landscape.
In summary:
- US debt has doubled since 2015 to around $36.6 trillion.
- New law increases debt by about $3 trillion by the mid-2030s.
- Interest payments rise to almost one trillion dollars annually.
- Moody’s lowered credit rating due to a lack of deficit measures.
- Global investors are concerned about US fiscal policy.
- Risk of losing confidence in US Treasury bonds is increasing.
These developments are increasingly making the international financial sector nervous about potential consequences for global capital flows and investment decisions.