Net Federal Interest (% GDP)

Federal government net interest payments as a percentage of nominal GDP — the most direct measure of debt-service crowding out. As interest rates stay elevated, this ratio rises mechanically as existing low-rate debt matures and is refinanced at higher rates. Above 3% of GDP is historically associated with fiscal stress and political pressure for austerity; the US is on a trajectory to exceed 4% by 2026–27 under CBO projections. At that level, interest payments exceed total defense spending, forcing a structural choice between debt service and discretionary outlays.

This indicator is computed by MacroLab from two FRED series: A091RC1Q027SBEA divided by GDP, scaled by × 100. Both input series are sourced from the Federal Reserve Economic Data (FRED) database.