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U.S. Budget Deficit to Hit $1.85 Trillion in 2026 as Debt Climbs Toward Record Levels, CBO Warns

The U.S. federal budget deficit is on track to worsen in the coming years, the nonpartisan Congressional Budget Office said in its latest projections on Feb. 11. The agency forecasts that the deficit will grow slightly in fiscal 2026 to about $1.85 trillion, equivalent to roughly 5.8% of GDP, up from about $1.78 trillion in 2025.

Over the next decade, deficits are expected to remain persistently large, averaging about 6.1% of GDP, and rising to approximately 6.7% by fiscal 2036 under current law — far above the roughly 3% target set by U.S. Treasury officials.

The outlook reflects slower economic growth assumptions by the CBO — projecting real GDP growth around 2.2% in 2026, fading to about 1.8% later in the decade — as well as the impact of recent tax and spending policies, including extensions of prior tax cuts.

The agency’s long-term forecasts also show federal debt rising steadily, with debt held by the public projected to surpass its post-World War II peak as a share of the economy by 2030 and climb toward 120% of GDP by 2036. Read More. 

What this means for you

When deficits grow to levels comparable with Social Security and Medicare spending, it signals structural fiscal imbalance — not just a temporary problem.

For individuals, that means:

• Greater importance of diversified assets

• Protection against inflation and currency debasement

• Reduced reliance on government programs

• Proactive retirement and wealth preservation planning

The 2030 deficit projection isn’t just a headline. It’s a warning that the financial environment over the next decade may look very different from the past one.

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Oil Surges, Markets Slide After U.S.–Israel Strikes on Iran; Fed Likely to Hold Rates Steady

Oil prices jumped and global stocks fell after U.S. and Israeli strikes on Iran triggered retaliation and disrupted traffic through the Strait of Hormuz, a key global oil route. Iran supplies about 4% of the world’s crude, making energy markets highly sensitive to escalation.

Economists say the conflict will likely push U.S. gas prices higher and increase market volatility in the short term. However, because this is viewed as a supply-driven oil shock — not overheating demand — the Federal Reserve is expected to hold interest rates steady at its upcoming meeting unless the war becomes prolonged and significantly disrupts global energy flows. More.

What this means for you

This situation affects you in three major ways:

1. Higher Gas & Everyday Costs

If oil prices remain elevated:

• Gas prices rise

• Transportation costs increase

• Businesses may pass higher input costs on to consumers

Even short-term energy spikes can ripple through groceries, shipping, and travel.

2. Market Volatility

Geopolitical shocks often trigger:

• Stock market swings

• Flight to safe-haven assets

• Temporary fear-driven selling

Markets may have priced in some risk already, but headlines can move prices quickly.

3. Inflation Risks — But Not Necessarily Higher Rates

If energy prices spike:

• Headline inflation could tick higher

• The Fed may avoid tightening policy because rate hikes won’t fix supply disruptions

That creates a tricky environment:

• Slower growth

• Sticky inflation

• Elevated uncertainty

If the conflict expands or disrupts oil flows long-term, the risk shifts from a temporary shock to something more structural — potentially increasing recession or stagflation risk.