Days Before The Midterms, Trump Warns Of “1929-Style Economic Depression” If Dems Win, As National Debt Tops $40 Trillion
Trump warned of a coming depression at a rally the same day a debt milestone quietly passed, while an economist says the collapse arrives no matter who wins Tuesday.
At a rally in Corinth, Mississippi on Oct. 26, a week before the Nov. 3 midterm elections, Donald Trump told supporters that if Democrats win, “you will have a 1929-style economic depression.” In the same section, he said Democrats’ policies would produce “a massive recession or depression.”
According to the Roll Call Factbase transcript, he also repeated his pledge of $5,000 for every adult citizen if Republicans win the House and Senate. He gave credit to tariffs and to what he called “record-setting economic success.”
On the day of the rally, gross federal debt rose above $40.5 trillion for the first time per Treasury’s Debt to the Penny data.
Trump did not link the debt to his warning. His only mention of debt came about a minute later: “We want to pay down debt and everything.”.
How Fast the Debt Is Growing
Gross debt, which includes money the government owes its own trust funds, first passed $40 trillion on Aug. 18, reaching $40.05 trillion, per IBTimes UK. Of that, the same outlet reports $32.3 trillion is held by the public. When fiscal 2026 ended on Sept. 30, the total was at $40.17 trillion, per the Independent Institute. Final figures Treasury released Oct. 16, reported by Dave Manuel, show the government spent $7.40 trillion during the year and ran a deficit of $1.99 trillion.
Interest Now Costs More Than Defense
TFTC, citing Treasury’s Monthly Treasury Statement, reports that net interest reached $1.05 trillion in fiscal 2026, while national defense came to $965 billion. Interest first passed defense in the opening quarter of the fiscal year, at $270.3 billion against $266.9 billion, per Anadolu. The Congressional Budget Office (CBO) measures net interest differently and gets a higher number, $1.14 trillion, per Dave Manuel. IBTimes UK reports that interest takes about 19% of federal revenue, and that the CBO expects the share to reach 26% by 2036.
Borrowing costs are the reason. On Oct. 28, the 10-year Treasury yielded 5.05% and the 30-year yielded 5.37%. The Federal Reserve left rates unchanged this week, keeping the top of its target range at 4.00%. Each time older Treasury debt matures, it gets refinanced at rates like these.
What Current Data Shows About Recession Risk
The economy grew at a 3.4% annualized rate in the third quarter. Unemployment was 4.2% in September. The Sahm Rule recession indicator read 0.00, well below the 0.50 level that has historically marked the start of a recession.
Households feel worse than those numbers suggest. The University of Michigan’s consumer sentiment index fell to 48.1 in September, and regular gas averages $4.27 a gallon. CBS Austin reports that higher gas prices linked to the Iran war, along with some senators calling for the war to end, are influencing midterm messaging. It also reports that polls show Democrats gaining ground in red areas.
Some critics say a downturn is coming either way. Economist Peter Schiff wrote on X that a depression is coming “regardless of the outcome” and that the forecast lets Trump “blame Congress,” per Benzinga.
Rising Interest Bills Await the Next Congress
Whichever party wins, the next Congress takes over a budget where interest already costs more than defense and keeps competing with Social Security, Medicare and everything else. Two things will signal whether that pressure is growing. Treasury’s monthly statements for fiscal 2027 will indicate if interest keeps running ahead of defense. The 10-year yield will show what new borrowing costs, as the debt passes $40.5 trillion.
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AJ spent 10 years writing about financial markets at The Motley Fool. His coverage centers on technology stocks and the broader macroeconomic trends, from interest rates to geopolitics, that shape where markets are headed next. AJ is drawn to the stories where big-picture economics and individual companies collide.
