U.S. economic growth remains surprisingly robust heading into 2026, with strong consumer spending and business investment in AI technologies powering a resilient economy despite ongoing challenges from the recent government shutdown, Treasury officials reported Monday.
The Treasury Borrowing Advisory Committee’s latest quarterly assessment, released today, shows an economy that continues to defy earlier predictions of a slowdown, with real GDP having risen 4.4% in the third quarter of 2025, up from 3.8% in the second quarter. Private forecasters estimate fourth-quarter growth will settle at a still-healthy 2.2%.
Borrowing Needs Increase
Despite the economic strength, Treasury borrowing requirements continue to climb. The department anticipates borrowing $1.147 trillion over the six months spanning October 2025 through March 2026 — that’s $158 billion more than during the same period a year earlier.
What’s driving this increased borrowing? A combination of persistent budget deficits and higher interest payments on existing debt, even as tax revenues have shown modest improvement alongside economic growth.
“The strength in consumer demand and business investment in equipment and artificial intelligence technologies continues to surprise on the upside,” said one Treasury official who wasn’t authorized to speak publicly. “But we’re still dealing with the fiscal reality of large structural deficits.”
Debt Strategy Maintains Course
The Treasury Borrowing Advisory Committee, which convenes quarterly to advise the Treasury on debt management strategies, recommended maintaining nominal coupon and Floating Rate Note (FRN) auction sizes at current levels for now. The committee did, however, suggest increasing Treasury Inflation-Protected Securities (TIPS) tenors by $1 billion this quarter — a modest adjustment that suggests some concern about inflation pressures.
The committee’s next meetings are scheduled for April 29 and July 29, with its most recent Economic Policy Statement having been published on November 3, 2025.
Still, the data delays resulting from the recent government shutdown have complicated the Treasury’s analysis. Several key economic indicators that normally inform these quarterly assessments were postponed, forcing officials to rely more heavily on private-sector forecasts and preliminary figures.
Looking Ahead
The Treasury’s borrowing needs come at a time when interest rates remain relatively high by historical standards, though they’ve stabilized in recent months. This means the cost of servicing the national debt continues to consume a growing portion of federal spending.
For businesses and consumers alike, the economic outlook presents a mixed picture. The robust growth suggests continued job opportunities and potential wage increases, but the government’s substantial borrowing needs could eventually put upward pressure on interest rates that affect everything from mortgages to auto loans.
The next Treasury borrowing update is scheduled for early May, following the TBAC’s April meeting — by which time officials hope to have a clearer picture of how the economy performed through the winter months and early spring of 2026.
