The 2026 federal deficit likely topped $2 trillion, 6.2% of GDP, with debt held by the public at $32.3 trillion, or 100% of GDP. CRFB estimates interest alone hit $1.1 trillion, a record 3.4% of GDP,

What happened: Treasury yields above 5% are raising borrowing costs for households and the federal government, highlighting the challenge of financing $2 trillion deficits. Key numbers: Treasury yields above 5%; $2 trillion deficits. Why it matters: Higher yields increase the cost of servicing federal deficits and of borrowing for households, making deficit financing a central economic challenge.

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