US debt servicing costs are taking up a larger share of the federal budget as borrowing costs stay elevated. The Congressional Budget Office estimates that net interest spending for the fiscal year ending Sept. 30 topped $1.1 trillion, up 11% from a year earlier. More than one-fifth of US tax revenue is now going toward interest payments on federal debt, with interest expenses accounting for 22% of total fiscal spending, the highest level in nearly 24 years.
The move comes as the 10-year US Treasury yield remains near multi-decade highs. It touched 5.35% on Oct. 7, its highest level since 2002, although the Treasury’s average interest rate paid currently stands at 3.475%. Data from the Joint Economic Committee shows that about 33% of marketable US debt will mature within 12 months, leaving a large portion of outstanding debt to be refinanced at higher yields.
The CBO also projects the US fiscal deficit will reach $1.993 trillion in fiscal 2026, up 12% from the previous year. Spending is expected to rise 6%, while revenue increases 3%. In the context of economic growth, the deficit is projected to come in at nearly 6% of GDP.
US net interest spending for the fiscal year ending Sept. 30 exceeded $1.1 trillion, up 11% year over year, according to estimates from the Congressional Budget Office, or CBO.
More than one-fifth of US tax revenue is now being used to pay interest on federal debt. Interest costs account for 22% of total fiscal spending, a level not seen in nearly 24 years.
The 10-year US Treasury yield is also sitting near a multi-decade high. It reached 5.35% on Oct. 7, the highest reading since 2002. Even so, the average interest rate paid by the Treasury is 3.475%.
Data from the Joint Economic Committee shows that about 33% of marketable Treasury debt will mature within the next 12 months. As that debt is refinanced at higher yields, the average borrowing cost could move higher.
The CBO expects the US fiscal deficit to reach $1.993 trillion in fiscal 2026, up 12% from the previous year. Spending is projected to increase 6%, while revenue rises 3%. Against a backdrop of economic growth, the deficit is expected to amount to nearly 6% of gross domestic product.
The item was cited by BeInCrypto and republished in summary form by Techub.
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