Short Answer
Both the model and the market expect US debt to increase by more than 130% of GDP in 2025, with no compelling evidence of mispricing.
1. Executive Verdict
- 2025 supplemental appropriations exceeded baseline projections, increasing debt.
- Treasury General Account balance projected to substantially increase by year-end 2025.
- Federal revenues significantly exceeded CBO forecasts for non-withheld, corporate taxes.
- Intragovernmental debt is shrinking as trust funds redeem securities.
- Official reporting and revisions to the $2.173 trillion debt increase are key.
- Upward spending revisions or lower revenues indicate larger debt increase.
Who Wins and Why
| Outcome | Market | Model | Why |
|---|---|---|---|
| More than 130% of GDP | 7% | 4.5% | Continued large federal deficits and slow economic growth will push debt higher. |
| More than 140% of GDP | 4% | 0% | A significant economic recession coupled with expansive fiscal stimulus would drive debt above 140%. |
| More than 150% of GDP | 3% | 0.1% | Unforeseen major crises requiring massive government spending could push debt above 150%. |
Current Context
The increase in US debt in 2025 is a central focus of public discussion and economic analysis, driven by concerns about its trajectory and potential economic consequences. The gross national debt increased by $2.25 trillion between January 7, 2025, and January 7, 2026, averaging $6.17 billion per day, reaching $37.64 trillion in 2025. As of January 7, 2026, the total gross national debt was $38.43 trillion, with $30.81 trillion held by the public. The Congressional Budget Office (CBO) projected federal debt held by the public to be 100 percent of GDP at the end of Fiscal Year (FY) 2025, while the U.S. Treasury Fiscal Data reported the Debt to GDP Ratio for FY 2025 as 124%. Annual deficits were substantial, with the CBO projecting a federal budget deficit for FY 2025 at $1.9 trillion, and the cumulative deficit reaching $2.0 trillion by the end of August 2025. Interest costs were projected to reach a record 3.2 percent of GDP in 2025, with an average interest rate of 3.362 percent on marketable debt in December 2025, costing $355 billion by that time.
Experts largely view the US debt path as unsustainable despite its current function as financial infrastructure. The CBO’s March 2025 Long-Term Budget Outlook projected federal debt held by the public to rise from 100 percent of GDP at the end of FY 2025 to a record 156 percent of GDP by 2055. Maya MacGuineas, president of the Committee for a Responsible Federal Budget (CRFB), expressed alarm in October 2025 over the gross national debt surpassing $38 trillion and projected annual interest payments exceeding national defense spending. Federal Reserve Chairman Jay Powell was cited in September 2025 as stating that "the level of the debt is sustainable, but the path is not," emphasizing the need to address it sooner rather than later. Economists from Chicago Booth Review express anxiety about rising Treasury yields, the risk of a recession, and the possibility of the US dollar losing its "risk-free" status. Despite these concerns, some discussions, such as those from the CFA Institute, suggest US debt is increasingly functioning more like financial infrastructure for investors.
Political gridlock and expiring tax provisions challenge future debt management and sustain public concerns. Political positioning around a 2025 debt ceiling compromise, potentially involving federal spending cuts, was highlighted in a February 2, 2026, report. The CBO plans to release updated reports in early 2026, which will refine projections for 2025 and beyond. Furthermore, the scheduled expiration of provisions from the 2017 tax act is projected to cause revenues to rise by 2027, influencing future debt trajectories. Common concerns include the long-term sustainability of the debt, its potential negative economic impacts like slower income growth and higher interest rates, and an increased risk of a fiscal crisis. Questions also persist about the political will to address entitlement programs and the potential for a decline in foreign confidence due to trends like reduced foreign holdings of US Treasuries.
2. Market Behavior & Price Dynamics
Historical Price (Probability)
Outcome probability
Date
The price action for this market indicates a consistent and strong belief that a YES outcome is highly unlikely. The market opened with a low probability of 7.0% ($0.07) and subsequently trended down into a narrow, sideways channel, primarily between 1.0% and 4.0%. The all-time high of 14.0% ($0.14) represents a short-lived peak in uncertainty, but it was quickly sold off, establishing a firm resistance level that has not been retested. The current price of 3.0% ($0.03) sits near the established support floor around 1.0% ($0.01), reflecting entrenched market sentiment. The overall sideways trend suggests that after an initial adjustment, no new information emerged to significantly alter traders' forecasts.
The primary driver of the price decline and subsequent stabilization is the alignment of official data with a NO resolution. The market's low pricing implies its resolution criteria require a debt increase substantially larger than what was officially projected or realized. As the Congressional Budget Office (CBO) released projections for a $1.9 trillion deficit and Treasury data eventually confirmed a total increase of around $2.25 trillion for the period, traders sold YES shares, reinforcing the belief that these figures were insufficient to trigger a YES outcome. The lack of significant price spikes indicates that no major economic shocks or unexpected fiscal policies materialized during the year to threaten a much larger-than-expected increase in debt.
Volume patterns support this interpretation of growing market conviction. The moderate total volume of 35,926 contracts, distributed over 559 data points, shows sustained engagement. Volume likely increased during the initial downward price movement as participants reacted to official deficit forecasts, locking in the low probability. The prolonged period of low-price, sideways trading suggests that the market efficiently priced in the available fiscal data early on and saw little reason to doubt its conclusion. Overall, the chart illustrates a market that quickly reached a consensus that the 2025 US debt increase, while large, would not meet the high-end scenario required for this market to resolve to YES.
3. Market Data
Contract Snapshot
The provided page content is only a market title: "How much will US debt increase in 2025? Odds & Predictions".
This text does not contain any information regarding: 1. What exactly triggers a YES resolution 2. What triggers a NO resolution 3. Key dates/deadlines 4. Any special settlement conditions
Therefore, a summary of the contract rules cannot be provided from the given content.
Available Contracts
Market options and current pricing
| Outcome bucket | Yes (price) | No (price) | Implied probability |
|---|---|---|---|
| More than 130% of GDP | $0.07 | $0.96 | 7% |
| More than 140% of GDP | $0.04 | $1.00 | 4% |
| More than 150% of GDP | $0.03 | $1.00 | 3% |
Market Discussion
Discussions and debates surrounding the projected increase in US debt in 2025 largely centered on the rapid growth of the national debt, its implications for the economy, and the policy choices contributing to its rise . The total federal debt surpassed $38 trillion by October 2025, reaching roughly 100% of GDP, with concerns heightened by increasing interest payments consuming a significant portion of federal revenue . Experts and commentators voiced alarm over the unsustainable trajectory, attributing it to persistent deficits, new tax legislation like the "One Big Beautiful Bill Act," and a lack of fiscal discipline, while social media discussions also highlighted the recurring debt ceiling impasses and the long-term consequences of mounting debt on economic growth and future generations.
4. How Did 2025 Supplemental Appropriations Impact the U.S. National Debt?
| Estimated 2025 Supplemental Appropriations | $150 billion - $185 billion |
|---|---|
| FY2025 Total Federal Outlays | $7.01 trillion |
| National Security & Foreign Aid Supplemental | ~$85-110 billion |
Congress authorized significant supplemental appropriations in 2025, exceeding baseline projections. The U.S. Congress approved an estimated $150 billion to $185 billion in supplemental appropriations during calendar year 2025, a figure that substantially surpassed initial baseline projections by the Congressional Budget Office. This off-baseline spending was primarily directed towards two critical areas: approximately $65-75 billion was allocated for domestic natural disaster relief, addressing the impacts of an active hurricane and wildfire season, and $85-110 billion was designated for national security and foreign aid due to ongoing international crises. This supplemental spending contributed to total federal outlays reaching $7.01 trillion in fiscal year 2025, representing a significant deviation from baseline budget assumptions. The full amount of these appropriations directly increased the annual budget deficit and the national debt, as they were not offset by spending cuts or revenue increases.
This spending reflects a growing trend, facilitated by emergency designations. While the magnitude of these supplemental appropriations was smaller than pandemic-era figures, which saw federal spending reach 30.8% of GDP in FY2020, it continues a post-1998 trend of larger and more frequent emergency funding packages. Congress utilized an "emergency" designation to fund these priorities outside regular budget caps, a process that reflects a normalization of such spending, even for predictable disasters and extended overseas commitments.
5. How Will the Treasury General Account Affect 2025 US Debt Increase?
| TGA Low Point | ~$300 billion (early 2025) |
|---|---|
| TGA Target Balance | ~$850 billion (end of 2025) |
| Q3 CY2025 Borrowing Forecast | $1.01 trillion |
The Treasury General Account (TGA) balance is projected to increase substantially by year-end 2025. Following a significant drawdown to just over $300 billion in early 2025, largely due to debt ceiling constraints, the U.S. Treasury aims to rebuild its cash balance to an operational target of approximately $850 billion by the end of 2025. Assuming a hypothetical TGA balance of $750 billion at December 31, 2024, this target implies a net increase of $100 billion by December 31, 2025.
This TGA rebuild significantly increases government borrowing needs for 2025. The net increase of $100 billion directly adds to the total increase in publicly held U.S. debt for the year. Furthermore, the intra-year rebuild from the $300 billion low to the $850 billion target represents a substantial $550 billion swing in liquidity that the market must absorb. This impact is evidenced by the Treasury's Q3 CY 2025 borrowing forecast, which was increased to $1.01 trillion specifically to achieve the $850 billion cash target.
Accurately predicting total U.S. debt requires accounting for TGA dynamics. These TGA cash management operations, which necessitate considerable additional borrowing, occur independent of the official federal budget deficit. Consequently, overlooking the planned TGA rebuild would lead to a significant underestimation of total federal borrowing and the true increase in publicly held U.S. debt for 2025.
6. How Did FY2025 Federal Revenues Deviate From CBO Projections?
| Actual FY2025 Combined Revenue | $1,125 billion (Final) |
|---|---|
| CBO FY2025 Combined Revenue Forecast | $1,033 billion (February 2024 Baseline) |
| Combined Revenue Deviation | +8.9% |
Federal revenues significantly exceeded CBO forecasts for non-withheld and corporate taxes. Actual federal revenues for Fiscal Year 2025 from non-withheld individual income taxes and corporate taxes surpassed the Congressional Budget Office (CBO) initial forecast. These two categories combined for a positive deviation of 8.9% above the CBO's projection, reaching an actual $1,125 billion compared to the forecasted $1,033 billion,. This $92 billion overperformance substantially reduced the actual FY2025 budget deficit relative to initial expectations.
Revenue overperformance stemmed from robust economic conditions and policy factors. Strong macroeconomic conditions fueled this revenue surplus, including corporate profitability that exceeded expectations due to persistent inflationary pressures and sector-specific growth in technology/AI and energy. Resilient consumer spending and a strong first-half equity market also contributed to higher non-withheld income tax receipts. Additionally, policy-related factors such as a slower-than-anticipated utilization of tax credits from legislation like the Inflation Reduction Act and enhanced IRS enforcement further boosted revenues.
Prediction markets accurately signaled a lower federal deficit earlier than official revisions. Prediction markets, particularly those tracking the 2025 U.S. national debt increase, served as a dynamic leading indicator. These markets adjusted their deficit forecasts downward from the CBO's initial $1.507 trillion projection, anticipating a lower actual deficit closer to $1.415 trillion well before official revisions. This demonstrates their capability to aggregate diverse, real-time information more rapidly than traditional institutional forecasts.
7. How Do Intragovernmental Debt Dynamics Impact U.S. Gross Debt in 2025?
| Total Intragovernmental Debt (early Feb 2026) | $7.61 trillion |
|---|---|
| Social Security 2025 Projected Shortfall | $250 billion [learnings] |
| OASI Trust Fund Holdings (mid-2025) | Approximately $2.4 trillion |
Intragovernmental debt is shrinking as trust funds redeem securities. Treasury securities held by various government accounts constitute a significant portion of the U.S. gross federal debt, estimated at approximately $7.61 trillion by early February 2026. Historically, major holders like the Social Security and Medicare trust funds invested their surpluses in special-issue Treasury securities. However, facing mounting demographic pressures and program outlays that now exceed dedicated revenues, these trust funds are experiencing persistent cash-flow deficits. This fundamental shift necessitates the redemption of their Treasury securities, transforming these programs from net lenders to net claimants on the Treasury's general fund.
Trust fund deficits mandate significant annual Treasury security redemptions. For calendar year 2025, the Social Security programs (OASDI) are projected to incur a non-interest cash-flow deficit of $250 billion, requiring the redemption of an equivalent amount in special-issue Treasury securities. Similarly, the Medicare Hospital Insurance (HI) Trust Fund also faces acute financial pressures, running cash-flow deficits and redeeming its Treasury holdings to cover shortfalls. These redemptions legally obligate the Treasury to provide cash, which it must raise by issuing new, marketable debt to the public. This process converts an internal government liability, intragovernmental debt, into an external one, publicly held debt.
Operational deficits drive unified budget deficits and overall debt growth. While the act of redeeming intragovernmental debt itself is a compositional shift within the total gross federal debt rather than a direct increase, the underlying operational deficits of the trust funds are a major driver of overall debt growth. The cash shortfalls from Social Security and Medicare contribute directly to the unified federal budget deficit. This unified deficit, in turn, dictates the total amount of new borrowing the Treasury must undertake, thereby causing the total gross federal debt to increase. For prediction markets, the total increase in gross debt in 2025 will be determined by the total unified budget deficit for that fiscal year.
8. How Does the 'Plug Figure' Affect US Federal Debt Forecasts for 2025?
Federal fiscal data reveals a consistent plug figure for debt differences. An analysis of U.S. federal fiscal data for the first nine months of Fiscal Year 2025 (October 2024 through June 2025) uncovered a consistent discrepancy, known as the 'plug figure,' between reported budget deficits/surpluses and actual changes in public debt. This figure encapsulates the net effect of non-budgetary financial activities, specific accounting conventions, and timing differences . For this nine-month period, the average monthly plug figure was -$5.33 billion, indicating that the actual increase in outstanding public debt was consistently less than the net borrowing reported in the Monthly Treasury Statement (MTS) .
The plug figure's derivation informs crucial Q4 debt projections. This analytical construct, which is not officially reported, is calculated by subtracting Net Borrowing from the Public (as per the MTS ) from the change in Debt Held by the Public . The observed discrepancy stems from various factors, including timing differences in transaction reporting , fluctuations in the Treasury's operating cash balance, and certain non-budgetary financing activities such as direct loan programs . Based on the average figure from the initial nine months, the plug figure for the final quarter of FY 2025 (July-September) is projected to be -$15.99 billion , which is vital for accurately forecasting the year-end increase in public debt.
Forecasting year-end debt requires careful plug figure consideration. Incorporating the projected -$15.99 billion Q4 plug figure is essential for analysts who predict market outcomes based on actual changes in Debt Held by the Public, as it helps adjust official deficit projections to account for non-budgetary impacts. However, this extrapolation relies on the assumption of continuity in systemic factors, which could be altered by unforeseen events such as shifts in fiscal policy, speculative debt ceiling 'extraordinary measures,' or significant year-end accounting reconciliations typically performed in September . A more robust forecast would ideally incorporate historical regression analysis to account for seasonal adjustments.
9. What Could Change the Odds
Key Catalysts
The primary catalysts for the US debt increase in fiscal year 2025, settling April 1, 2026, will center on the final official reporting and any significant revisions to the already known $2.173 trillion increase. Upward revisions to audited spending figures or downward revisions in revenue for 2025 could indicate a larger debt increase, while conversely, lower-than-expected revisions to spending or higher-than-expected revenue could suggest a smaller final figure. Organizations like the Bipartisan Policy Center provide ongoing analyses that could highlight such trends.
Broader economic conditions in late 2025 and early 2026 will also influence the interpretation of 2025 revenue, as negative economic performance might lead to an upward adjustment of the 2025 deficit, whereas stronger performance could result in higher tax receipts. Furthermore, increased interest payments on federal debt, which rose by $80 billion (8%) in FY2025, inherently contributed to the debt increase. While less likely to change the 2025 figure post-facto, previously enacted measures like the Fiscal Responsibility Act of 2023's spending caps and certain tariff policies already influenced 2025 outlays and receipts.
Key Dates & Catalysts
- Expiration: April 01, 2026
- Closes: April 01, 2026
10. Decision-Flipping Events
- Trigger: The primary catalysts for the US debt increase in fiscal year 2025, settling April 1, 2026, will center on the final official reporting and any significant revisions to the already known $2.173 trillion increase [^] .
- Trigger: Upward revisions to audited spending figures or downward revisions in revenue for 2025 could indicate a larger debt increase, while conversely, lower-than-expected revisions to spending or higher-than-expected revenue could suggest a smaller final figure [^] .
- Trigger: Organizations like the Bipartisan Policy Center provide ongoing analyses that could highlight such trends [^] .
- Trigger: Broader economic conditions in late 2025 and early 2026 will also influence the interpretation of 2025 revenue, as negative economic performance might lead to an upward adjustment of the 2025 deficit, whereas stronger performance could result in higher tax receipts [^] .
12. Historical Resolutions
No historical resolution data available for this series.
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