The United States The national debt has now exceeded $38 trillion, as reported by the U.S. Treasury Department, a milestone reached merely two months after it outpaced earlier projections to hit $37 trillion in August. The federal debt increased by $1 trillion in just over two months, a pace of growth that Peter G. Peterson Foundation notes is the quickest seen since the pandemic.
TL;DR
- US national debt exceeds $38 trillion, growing at the quickest pace since the pandemic.
- Annual interest payments on the debt reach $1 trillion, crowding out investments.
- Government shutdowns and fiscal irresponsibility worsen the debt and economic strain.
- Escalating debt may drive inflation, hinder economic growth, and reduce jobs.
Michael A. Peterson, chief executive of the nonpartisan organization focused on fiscal responsibility, stated this milestone is “the latest troubling sign that lawmakers are not meeting their basic fiscal duties.” In a declaration sent to Fortune, Peterson said that “if it seems like we are adding debt faster than ever, that’s because we are. Just two months ago, we surpassed $37 trillion, and our current growth rate is double that seen since 2000. The foundation's analysis points to deficit spending and increasing as key drivers of this accelerated pace. The ongoing government shutdown's economic drag, coupled with interest costs, is a significant concern.
Peterson highlighted the swift increase in expenses associated with managing this debt. Annual interest payments on the national debt have reached approximately $1 trillion, making it the most rapidly expanding segment of the federal budget. In the past ten years, the government allocated $4 trillion to interest payments, and Peterson's projections indicate this figure will surge to $14 trillion within the coming decade. He said that money “crowds out important public and private investments in our future.”
The shutdown intensifies the financial strain.
The government shutdown, which has now extended into its third week, is exacerbating these difficulties. According to federal estimates, government shutdowns have proven expensive, costing an additional $4 billion in federal expenditures during the 2018–2019 shutdown and $2 billion in 2013. Each day the government remains shut down increases immediate expenses, hinders economic progress, and postpones fiscal adjustments, thereby exacerbating the very debt issues that frequently cause such shutdowns.
Treasury reports have consistently cautioned that delays in fiscal decision-making also escalate long-term expenses. The The Fiscal Service's Financial Report from The Treasury for fiscal year 2024 detailed a “unsustainable fiscal path” and suggested that “current policy is not sustainable.” Deficit reduction has fallen considerably short of expectations. The pace observed following prior economic downturns, such as the Great Recession, when Congress enacted more stringent spending limits and fiscal adjustments within a few years of recovery.
The consequences of debt spread
Servicing solely the interest on this debt could have widespread economic repercussions. A recent Yale Budget Lab report pointed out that escalating national debt is driving up both inflation and interest rates, which could hinder economic expansion and increase the expense of borrowing for individuals and companies. This year, an analysis conducted by EY revealed that the nation's escalating debt could result in ongoing job and income reductions in the long run.
A complicating factor, somewhat, is the “significant” revenue being generated by President Donald Trump’s tariff regime, several analysts have noted. Torsten Slok, Chief Economist at Apollo Global Management said the $350 billion being generated each year was “very significant” in September. The Congressional Budget Office (CBO) found that the tariffs, as constructed in August, before an appeals court ruled many of them to be illegal, could cut deficits by $4 billion over the next decade. The ratings agency S&P Global confirmed the U.S. Shortly before the appeals court issued its ruling, the credit rating was downgraded, stating that “broad revenue buoyancy, including robust tariff income, will offset any fiscal slippage from tax cuts and spending increases.”
However, the U.S. Credit rating is no longer top-rated at any of the three major ratings agencies, which have cited both unsustainable fiscal trends and recurring political gridlock. These reductions have immediately impacted borrowing expenses, increasing them further and prompting inquiries into the U.S.'s enduring global position. The U.S. Dollar's status as the global reserve currency. In a similar vein, gold has been on a historic tear for a significant portion of 2025, subsequently experiencing its most severe decline earlier this week. The price of gold remains above $4,000 an ounce, marking a rise of over 50% since the start of the year.
“Adding trillion after trillion to the debt and budgeting-by-crisis is no way for a great nation like America to run its finances,” Peterson said. “Lawmakers should take advantage of the many responsible reforms available that would put our nation on a stronger path for the future.”
A request for comment sent to the Treasury Department went unanswered.