The United States has reached a new record in its gross national debt, surpassing $38 trillion during the ongoing federal government shutdown. This milestone marks the fastest accumulation of $1 trillion in debt outside the COVID-19 pandemic, with the nation hitting $37 trillion just in August 2025.
The Treasury Department’s latest report tracks the country’s daily finances, confirming the new peak. Experts warn the rising debt could have long-term economic consequences.
Kent Smetters, a University of Pennsylvania economist who previously served in President George W. Bush’s Treasury Department, said higher debt can lead to greater inflation. “This erodes Americans’ purchasing power,” he told the Associated Press. “It makes it harder for future generations to afford homes or maintain financial stability.”
The Government Accountability Office also notes that growing government debt can result in higher borrowing costs for mortgages and cars, lower wages as businesses have less capital to invest, and more expensive goods and services.
Despite the record debt, the Trump administration maintains that its fiscal policies are helping slow government spending and reduce the deficit. Treasury officials reported that the cumulative deficit from April to September totaled $468 billion, the lowest since 2019.
Treasury Secretary Scott Bessent highlighted the progress in a post, noting that the administration reduced the deficit by $350 billion compared to the same period in 2024. White House spokesman Kush Desai added that efforts to boost economic growth, lower inflation, collect tariff revenue, reduce borrowing costs, and cut waste, fraud, and abuse are ongoing.
The national debt has grown rapidly over the last year. The Joint Economic Committee estimates that the total debt has increased by about $69,700 every second. The U.S. reached $34 trillion in January 2024, $35 trillion in July 2024, and $36 trillion in November 2024.
Michael Peterson, chair and CEO of the Peter G. Peterson Foundation, said the $38 trillion milestone during a government shutdown highlights lawmakers’ failure to meet basic fiscal responsibilities. “Along with increasing debt, you get higher interest costs, which are now the fastest growing part of the budget,” Peterson said. “We spent $4 trillion on interest over the last decade but will spend $14 trillion in the next ten years. This crowds out important public and private investments, harming the economy for every American.”
Analysts warn that continued debt growth could affect inflation, household purchasing power, and long-term economic growth. Rising interest payments on government debt are expected to consume a larger portion of the federal budget, limiting funds available for infrastructure, education, and other critical public investments.
As lawmakers remain deadlocked over government funding, experts stress the urgency of managing the debt to prevent further economic strain. With borrowing costs climbing and inflation pressures mounting, the $38 trillion debt level underscores the challenges facing the U.S. economy and future generations of Americans.
