Long-term bond yields above 5% and a federal deficit approaching $2 trillion are giving Americans a taste of what a U.S. debt crisis would look like. The deficit is expected to represent between 6.0 and 6.2% of gross domestic product for fiscal year 2026, with total debt reaching $40 trillion. The housing market is slowing, with 30-year fixed mortgage rates hovering around 7.5% and pending home sales dropping 4% in September. Treasury Secretary Scott Bessent has advocated bringing the deficit below 4% of GDP by the end of Donald Trump’s term, a target analysts consider nearly unattainable. Resolving this worrying trajectory would require 7.2% economic growth for a decade, a transformation deemed almost unthinkable.
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