Abstract

We document the trajectory of the US federal debt-to-GDP ratio, the interest-to-GDP ratio, and the effective interest rate on outstanding debt from 1947 through 2026 using FRED quarterly data. The debt-to-GDP ratio has risen from 36.9% in the Bretton Woods period (1947–1971) to 120.1% in the Post-COVID period (2020 onward), with a temporary peak of 132.7% in 2020Q2. The interest-to-GDP ratio shows a more complex trajectory: it rose to 4.99% in 1991Q1 under the combined effect of high debt and high interest rates, fell to 2.53% during the Post-GFC zero-rate period, and has risen back to 3.91% by 2025Q4. The effective interest rate on outstanding federal debt fell from 10.16% during the Reagan-Bush era (1983–1992) to 2.60% in the Post-COVID period, but has been rising since the 2022 tightening cycle. We argue that the contemporary US fiscal position is characterized by the unusual combination of historically high debt-to-GDP and rising effective interest rates, a combination that has not been observed for sustained periods in the postwar US record. We formally test for a structural break in the debt-to-GDP series and identify 2008Q4 as the maximum-likelihood break date (sup-F = 156.7), corresponding to the Great Recession fiscal expansion. We distinguish the marginal interest rate on new issuance from the average effective rate on outstanding debt and document the convergence dynamics that will determine the future trajectory of the interest burden. We test the sensitivity of the regime-by-regime findings to alternative boundary choices, demonstrating robustness across plausible shifts of one to two years. We discuss the implications for fiscal sustainability under the r < g condition, identify the cross-country context against which the contemporary US position can be evaluated, and provide projections under three alternative scenarios for the effective interest rate and nominal GDP growth.