Rising US Debt Threatens to Derail AI Boom

Persistent US budget deficits have shifted the cycle’s biggest borrowing excesses onto the government balance sheet, raising the prospect that Treasury financing will crowd out private investment. Deficits have averaged about 6% of GDP this decade, more than twice the norm in earlier decades, while federal interest payments have more than doubled over five years to above 3% of GDP. Public debt has nearly tripled since the late 1990s to roughly 100% of GDP, making the economy more exposed to rising long-term rates.

In a Financial Times commentary published on Sept. 7, 2026, Rockefeller Capital Management International Chair Ruchir Sharma said the 10-year Treasury yield had reached 4.8%. A move above 5% by November would represent an increase of more than 75 basis points in six months, a pace that has historically ended bull markets. Companies are expected to generate about $200 billion in annual AI revenue this year while spending more than $1 trillion on data centers and related infrastructure, leaving an expanding funding gap vulnerable to higher bond yields.