Jackson Hole Paper Projects U.S. Debt Could Reach 250% of GDP Without Raising Rates Amid $1.2 Trillion Interest Expense

A paper presented at the 2025 Jackson Hole conference suggests that U.S. government debt could rise to 250% of gross domestic product without causing upward pressure on interest rates. This projection contrasts with the current U.S. debt-to-GDP ratio of approximately 120%. The paper implies that such a high debt level might not hinder the government's ability to manage financial crises, pandemics, climate events, and wars, although some experts express skepticism about this assumption. Concerns have been raised about the potential collapse of foreign investor confidence in the U.S., which could trigger dollar and bond-market crises. Interest expenses on the federal debt have reached a record $1.2 trillion over the past 12 months, highlighting the importance of maintaining interest rates below 3.1% to stabilize these costs.