The Ever-Escalating US Federal Debt

US federal deficits are likely to remain above 6% of GDP for the next decade, driving a significant rise in the debt-to-GDP ratio.

• US federal debt exceeded $40 trillion in the week of August 21, 2026.
• The Congressional Budget Office raised its deficit forecast, reinforcing the view that elevated deficits will persist for years.
• Ronald Temple expects US deficits to exceed 6% of GDP every year for the next decade.
• The US-Iran standoff showed no significant progress toward an enduring ceasefire, and Lazard Geopolitical Advisory expects the conflict to persist in the coming months.
• Japan’s July consumer-price inflation matched consensus, while Temple expects inflation to remain around 2% and notes that yen-supportive monetary policy could alter the outlook.

Takeaway: Investors should account for sustained US fiscal deterioration and a rising debt burden, while monitoring geopolitical risks and Japanese policy decisions that could affect inflation and currencies.