The U.S. government ended fiscal year 2026 with publicly held federal debt equal to 100.03% of gross domestic product, marking the first time since 1946 that the debt-to-GDP ratio reached that level at the end of a fiscal year.

Economic data released Thursday placed publicly held debt at approximately $32.2 trillion as of Sept. 30, the final day of the fiscal year. The ratio rose from 99.4% at the end of fiscal 2025, although it remained below the Congressional Budget Office’s February projection of 100.6%.

The milestone brings the United States closer to the post-World War II record of approximately 106% of GDP, reached in 1946 after the federal government borrowed heavily to finance the war. Unlike that period, when extraordinary wartime spending drove the debt higher, the current borrowing surge has continued during peacetime and outside a major national emergency.

The federal budget deficit approached $2 trillion in fiscal 2026, equivalent to 6.2% of GDP. Despite rapid economic growth in the third quarter, federal borrowing continued to expand at a pace that kept the debt burden at roughly the size of the entire American economy.

The publicly held debt figure differs from gross federal debt, which recently surpassed $40 trillion. Gross debt includes money the federal government owes itself, such as Treasury securities held by the Social Security trust fund. Economists often use publicly held debt to assess the broader economic burden because it excludes these internal government obligations.

Although the United States crossed the 100% threshold in an earlier calculation this year, the latest figures establish the milestone for a full fiscal year. The ratio is calculated by comparing publicly held debt with the economy’s output over the four quarters of the fiscal year. Because Thursday’s report included an initial estimate of third-quarter GDP, later revisions could push the final ratio slightly higher or lower.

The country’s fiscal position has deteriorated substantially since 2000, when publicly held debt stood at 33.7% of GDP and was declining. During the late 1990s, strong economic growth, spending restraint and capital gains tax revenue generated by the technology boom helped the federal government record annual budget surpluses.

By early 2001, then-Federal Reserve Chairman Alan Greenspan was discussing the potential economic and financial market complications that could arise if the government paid off its publicly held debt. Instead, successive tax cuts, expanded spending, and major national crises contributed to a prolonged period of increased borrowing.

The federal response to the Sept. 11, 2001, terrorist attacks, the 2008-2009 financial crisis, and the COVID-19 pandemic added significantly to government debt. Rising costs associated with an aging population have also increased pressure on Social Security and Medicare.

Future projections indicate that mandatory spending and debt servicing could further constrain federal finances. Social Security’s retirement and survivors trust fund is projected to be depleted in 2032. Without congressional action, the program would face automatic benefit reductions when dedicated funding becomes insufficient to cover scheduled payments.

Interest payments on the national debt represent another growing expense. The Congressional Budget Office projects that annual net interest costs will rise by more than one percentage point of GDP over the next decade. That outlook assumes interest rates below current levels.

Even a relatively small deviation could add substantial costs. If interest rates averaged just 0.1 percentage point above the CBO’s assumptions throughout its projection period, federal interest expenses would increase by an additional $379 billion over 10 years.

The debt milestone highlights the growing challenge facing lawmakers as the government balances spending commitments, tax policy, and borrowing costs. Without changes to federal revenues or expenditures, the combination of persistent deficits and rising interest payments threatens to place additional pressure on future budgets.