- The US debt crisis may be unfolding as a slow squeeze, with servicing costs reaching a record $1.1 trillion in fiscal 2026.
- Financial Times journalist Robin Wigglesworth warns the crisis is chronic, not acute, eroding America’s ability to spend on other priorities.
- Rising interest costs from refinancing low-rate Treasuries at up to 6% are driving the squeeze, leaving fewer fiscal tools for the next downturn.
Financial Times journalist Robin Wigglesworth issued a stark US debt crisis warning, noting that record servicing costs of $1.1 trillion in fiscal 2026 signal a slow-motion unraveling rather than a sudden bond market crash. He described it as the early stages of a chronic crisis that gradually tightens its grip on the budget.
Rising interest costs are the primary driver, as Treasuries originally sold at 1% to 3% are rolled over at rates up to 6%. The Committee for a Responsible Federal Budget estimates these costs now consume 3.4% of GDP, surpassing spending on defense or Medicare. Wigglesworth expects the figure to climb to around 5% within a decade.
“I think the US is maybe in the early stages of what I’d call a chronic debt crisis,” he said, “It’s just very slow, very gradual.” Unlike the acute crises seen in Argentina or Greece, he believes the US can print dollars, so the problem manifests as dwindling fiscal flexibility rather than hyperinflation or runaway bond yields.
However, not everyone shares his relative calm. With the 10-year Treasury yield above 5%, CRFB President Maya MacGuineas warned that a fiscal crisis, once unthinkable, is now a distinct possibility. Meanwhile, Scope Ratings kept the US at AA- but expects debt to near 160% of GDP within a decade.
Consequently, the slow squeeze leaves Washington with fewer tools for the next downturn, a scenario that matters for anyone holding bonds, stocks, or crypto. Wigglesworth concluded the crisis may never explode but could still be quite painful.
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