30 November 2023
US government debt is rapidly approaching $34 trillion, with rising interest rates pushing the Treasury’s borrowing costs higher. Inflation and Federal Reserve rate hikes have led to interest rates on new Treasury securities reaching between 4.3% and 5.5%. The average interest rate on all government debt increased from 1.57% in February 2022 to 3.05% in October. Consequently, the government’s interest payments have doubled since 2018, reaching $245 billion in Q3 2022. This escalation in debt servicing costs is placing a significant financial burden on the government, despite high tax revenues.