As we approach the midpoint of 2025, the U.S. national debt continues to be a topic of significant economic and political discussion. Recent data from the U.S. Treasury Department reveals some interesting shifts in who owns America's debt, reflecting changes in global economic dynamics and domestic fiscal policies.
The U.S. Federal Reserve system remains the largest single holder of U.S. debt, with approximately $4.7 trillion in holdings5. This represents a slight decrease from previous years, as the Fed has been gradually reducing its balance sheet.
Foreign investors continue to play a crucial role in financing U.S. debt. Japan and China, traditionally the largest foreign holders, now own about $1.1 trillion and $0.8 trillion respectively3. While China's holdings have declined over the past decade, other countries like the United Kingdom, Switzerland, and Ireland have increased their investments in U.S. Treasury securities.
Domestic investors hold a significant portion of the U.S. debt. Mutual funds account for about $3.7 trillion, while U.S. savings bonds held by individuals amount to approximately $5.7 trillion. State and local governments, pension funds, and insurance companies also hold substantial amounts of U.S. debt.
Intragovernmental debt, which includes holdings by Social Security and other U.S. agencies, stands at about $2.4 trillion. This represents money that the federal government owes to itself and is an important component of the overall debt picture.
The diversification of U.S. debt ownership has both positive and negative implications. On one hand, it reduces the risk of any single entity having too much influence over U.S. fiscal policy. On the other hand, the increasing debt levels raise concerns about long-term fiscal sustainability.
As of December 2024, the cost of maintaining the national debt reached $308 billion, accounting for 13% of total federal spending in fiscal year 2025. This significant expense underscores the importance of prudent fiscal management and the potential impact on future government spending and economic growth.
The changing composition of U.S. debt ownership reflects broader shifts in the global economy and will likely continue to evolve as we move through 2025 and beyond. Policymakers and investors alike will be watching these trends closely, as they have far-reaching implications for economic policy, international relations, and financial markets.