This week, the US national debt surpassed the $40 trillion milestone, which has intensified worries about a potential debt crisis. However, Brian Levitt, Chief Global Market Strategist at Invesco, is urging investors to step back and consider the bigger picture instead of fixating solely on the debt figures.

Levitt suggests that when confronted with alarming statistics, it is wise to pause and reflect on whether the broader context is being overlooked. Take the period when US federal debt climbed from roughly $20 trillion to $40 trillion; during that same timeframe, total household net worth surged from approximately $80 trillion to about $174 trillion. In other words, the cumulative increase in household wealth approached $95 trillion, more than double the growth in federal debt.

That said, growing household wealth does not automatically resolve the debt issue. If a solution is to be found, it will ultimately depend on the government making difficult decisions regarding tax policies, spending priorities, and strengthening public programs such as Social Security and Medicare. Rebuilding trust funds and narrowing the fiscal deficit is not primarily an arithmetic challenge, but rather a matter of mustering sufficient political will to drive meaningful reform.

Likewise, short-term interventions from the US Treasury cannot fully eliminate the underlying problems. Treasury Secretary Scott Bessent's recent moves may not resolve the nation's fiscal challenges, but they do serve as a reminder that policymakers often step in when market operations are visibly disrupted.

Meanwhile, bearish narratives continue to search for new justifications. Since early 2021, the S&P 500 has delivered strong returns despite recurring concerns about elevated valuations, an artificial intelligence (AI) bubble, excessive market concentration, and narrowing market breadth. When one worry fails to shake the market, a fresh concern tends to emerge, and now the focus has shifted to interest rates.

There is no question that rates have moved higher. The yield on the 10-year US Treasury has risen from around 4.2% at the start of the year to roughly 4.7% currently. Nevertheless, the market appears to have largely absorbed this change. Credit markets show no obvious signs of strain, the equal-weight S&P 500 index remains near all-time highs, and, most importantly, corporate earnings continue to beat expectations on a broad basis.

While interest rates matter, their impact must be assessed within the context of economic growth and corporate profitability. Investors should also remember that this is not an unprecedented situation. In 2023, after inflation had peaked, the 10-year Treasury yield approached 5%, and the market eventually digested that development as well. The lesson is not that rates are irrelevant, but rather that rising rates alone may not be enough to end a bull market when the underlying fundamentals remain solid.

For his part, Levitt says he prefers not to conflate short-term anxieties with long-term trends. Higher oil prices could create near-term challenges, and rising interest rates may increase market volatility. Both deserve close attention, but neither is sufficient to overturn his view on long-term structural growth drivers, which are anchored in AI-driven productivity gains, improved corporate efficiency, and stronger profitability.

He would only grow more cautious if corporate earnings were to fall noticeably short of expectations or if credit spreads were to widen significantly. Until then, compared with the $40 trillion debt figure or a 30-year Treasury yield climbing to 5.3%, the trajectory of corporate earnings remains the far more critical factor to monitor.