If you look at a chart of us national debt right now, it looks less like a fiscal report and more like a rocket ship taking off for Mars.
Honestly, the numbers are getting hard to wrap your head around. As of January 7, 2026, the gross national debt hit $38.43 trillion. That’s not a typo. We’ve added about $2.25 trillion in just the last twelve months. To put that in perspective, the government is currently borrowing roughly $92,912 every single second.
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You’ve probably seen the "Debt Clock" or some version of a line graph showing this vertical climb. But most people look at the chart and see a looming apocalypse, while others dismiss it as "money we owe ourselves." The truth is somewhere in the messy middle, and it has everything to do with how interest rates are currently eating the federal budget alive.
Why the Chart of US National Debt Looks So Different in 2026
For decades, the debt grew, but interest rates were so low it basically didn't "hurt" the budget. That's over. The era of free money died a few years ago, and we are now feeling the hangover.
The average interest rate on our marketable debt is now sitting around 3.36%. That might sound low compared to a credit card, but when you apply it to $38 trillion, the math gets terrifying. We are now spending more on interest payments than we do on the entire Medicaid program or national defense. In fact, for the 2026 fiscal year, interest is the second-largest line item in the budget, trailing only Social Security.
The Breakdown of Who Owns This
People love to say "China owns us," but that’s a bit of an old-school myth.
While foreign countries do hold a lot of our debt, the biggest "lenders" are actually us. Private investors, insurance companies, and even your own 401(k) likely hold Treasury bonds. Japan remains the largest foreign holder at over $1.1 trillion, while China’s holdings have actually been sliding down, currently sitting around $756 billion.
There's also this weird thing called "intragovernmental holdings." This is basically the government borrowing from itself—like taking money from the Social Security trust fund to pay for other stuff and leaving a "promissory note" in its place. That accounts for about $7.62 trillion of the total.
Is the Debt-to-GDP Ratio the Real Problem?
Raw numbers are scary, but economists usually care more about the Debt-to-GDP ratio. This is basically like looking at a person’s credit card balance relative to their salary.
If you have $50,000 in debt but make $500,000 a year, you’re fine. If you make $30,000, you’re in trouble.
Right now, the US debt-to-GDP ratio is hovering around 126.8%. We are officially producing less in total economic value each year than we owe. For context, after World War II, this ratio peaked at about 106% before dropping significantly during the post-war boom. We’ve blown past that record, and projections show us hitting 128% by next year.
The Tariff Factor
Interestingly, 2026 has seen a weird shift in revenue. Customs duties (tariffs) have spiked by nearly 300% due to aggressive new trade policies. The Congressional Budget Office (CBO) thinks this might actually shave a bit off the primary deficit over the next decade, but it’s a drop in the bucket compared to the compounding interest we’re paying.
What Actually Happens Next?
The "cliff" people keep talking about isn't usually a sudden crash. It’s more of a slow squeeze.
When the government has to spend 14% of all its tax revenue just to pay interest, that’s 14% that can't go to fixing bridges, funding schools, or cutting your taxes. It crowds out everything else.
If you’re looking for a silver lining, the Treasury still has a "bid-to-cover" ratio of over 2.0 for most bonds. That’s a fancy way of saying there are still plenty of people lining up to lend us money because they still trust the US dollar more than anything else.
Actionable Insights for Your Portfolio
You can't fix the national debt, but you can protect your own "chart" from the fallout.
- Watch the 10-Year Treasury Yield: This is the benchmark for everything from mortgages to car loans. If the debt continues to grow and investors get nervous, they’ll demand higher yields, which means your borrowing costs go up.
- Diversify Beyond the Dollar: With the debt-to-GDP ratio at record highs, some investors are hedging with international equities or hard assets (like gold or real estate) to protect against potential long-term dollar devaluation.
- Tax Planning is Critical: Expecting tax cuts to be permanent is risky when the government is $38 trillion in the hole. If you have the option for a Roth conversion or other tax-advantaged accounts, the "certainty" of today's tax rates might be better than the "uncertainty" of 2030.
- Monitor Inflation Gauges: Massive debt often leads to the temptation to "inflate it away." Keep an eye on the Core PCE (Personal Consumption Expenditures) index. If it stays above the Fed's 2% target while debt climbs, your purchasing power is the invisible casualty.
The chart of us national debt isn't just a political talking point anymore; it’s a math problem that has started to dictate how the Federal Reserve handles interest rates and how much you pay for a home. We’re currently on track to hit $39 trillion by April 2026. Tracking the velocity of that climb is probably the best way to see where the broader economy is headed before the headlines catch up.