US hits $38 trillion in debt, after the fastest accumulation of $1 trillion outside of the pandemic

US hits $38 trillion in debt, after the fastest accumulation of $1 trillion outside of the pandemic

ASSOCIATED PRESS

In the midst of a federal government shutdown, the U.S. government’s gross national debt surpassed $38 trillion Wednesday, a record number that highlights the accelerating accumulation of debt on America’s balance sheet. 

It’s also the fastest accumulation of a trillion dollars in debt outside of the COVID-19 pandemic — the U.S. hit $37 trillion in gross national debt in August this year.

The $38 trillion update is found in the latest Treasury Department report, which logs the nation’s daily finances.

Kent Smetters of the University of Pennsylvania’s Penn Wharton Budget Model, who served in President George W. Bush’s Treasury Department, told The Associated Press that a growing debt load over time leads ultimately to higher inflation, eroding Americans’ purchasing power. 

The Government Accountability Office outlines some of the impacts of rising government debt on Americans — including higher borrowing costs for things like mortgages and cars, lower wages from businesses having less money available to invest, and more expensive goods and services.

“I think a lot of people want to know that their kids and grandkids are going to be in good, decent shape in the future — that they will be able to afford a house,” Smetters said. “That additional inflation compounds” and erodes consumers’ purchasing power, he said, making it less possible for future generations to achieve home ownership goals.

Michael Peterson, chair and CEO of the Peter G. Peterson Foundation, said in a statement that “reaching $38 trillion in debt during a government shutdown is the latest troubling sign that lawmakers are not meeting their basic fiscal duties.”

“Along with increasing debt, you get higher interest costs, which are now the fastest growing part of the budget,” Peterson added. “We spent $4 trillion on interest over the last decade, but will spend $14 trillion in the next ten years. Interest costs crowd out important public and private investments in our future, harming the economy for every American.”

The U.S. hit $34 trillion in debt in January 2024, $35 trillion in July 2024 and $36 trillion in November 2024.