Federal Interest Payments
Quarterly federal government interest outlays — the direct cost of carrying the debt.
Key Insight
Federal interest outlays have crossed $1.1T annualized in early 2026, roughly doubling since 2021 and now exceeding the entire defense budget — the fastest-growing major line item in the federal ledger with no policy lever to slow it.
$1.2T
Trend YoY growth is +14.3%, accelerating by 0.7 pp/year over the last 25Y. Deviations have remained below trend for 6 consecutive periods. Latest: +6.5%, 7.7 pp below trend, a 0.73σ deviation. The latest YoY reading is boosted by 6.7 pp due to an easy comparison base from Jan 1. At current levels, YoY would fall to +1.6% by Jul '26 as comparisons tighten.
Level
YoY %
y = −3.3% + 0.7 pp/yr · t
Deviation from trend
Forecast
Projected value by forecast vintage ($B)
Projected value ($B)
| Forecast made in | Q2 '25 | Q3 '25 | Q4 '25 | Q1 '26 | Q2 '26 | Q3 '26 | Q4 '26 | Q1 '27 | Q2 '27 | MAPE |
|---|---|---|---|---|---|---|---|---|---|---|
| Q2 '25 | $1.2T | $1.2T | $1.2T | $1.2T | $1.1T | $1.1T | $1.1T | $1.1T | $1.0T | 54% |
| Q3 '25 | $1.2T | $1.2T | $1.1T | $1.1T | $1.1T | $1.1T | $1.0T | $913.4B | 107% | |
| Q4 '25 | $1.2T | $1.1T | $1.1T | $1.1T | $1.1T | $1.1T | $940.2B | 114% | ||
| Q1 '26 | $1.2T | $1.1T | $1.2T | $1.1T | $1.1T | $1.0T | ||||
| Q2 '26 | $1.1T | $1.2T | $1.1T | $1.1T | $1.0T |
YoY change forecast
| Forecast made in | Q2 '25 | Q3 '25 | Q4 '25 | Q1 '26 | Q2 '26 | Q3 '26 | Q4 '26 | Q1 '27 | Q2 '27 | MAPE |
|---|---|---|---|---|---|---|---|---|---|---|
| Q2 '25 | +5.2% | +6.0% | +3.4% | +0.8% | -1.8% | -4.3% | -6.9% | -9.5% | -12.0% | 54% |
| Q3 '25 | +4.6% | +1.0% | -2.0% | -5.0% | -8.0% | -11.1% | -14.2% | -17.2% | 107% | |
| Q4 '25 | +6.2% | -0.9% | -3.9% | -6.8% | -9.8% | -12.8% | -15.8% | 114% | ||
| Q1 '26 | +6.5% | -1.3% | -3.9% | -6.6% | -9.3% | -11.9% | ||||
| Q2 '26 | -1.3% | -3.9% | -6.6% | -9.3% | -11.9% |
Forecasts use ordinary least-squares linear regression fitted to the YoY change series over a rolling 3Y window. Each row shows a vintage — the forecast as it would have appeared at that point in time. Projected values apply the forecasted YoY change to the prior year's level, chaining forward where actuals are unavailable. MAPE measures forecast accuracy against realized values. These are mechanical trend extrapolations, not economic models.