The U.S. government’s national debt surpassed $38 trillion on Wednesday as the federal shutdown continued, marking a record and underscoring the rapid pace of borrowing. The nation crossed $37 trillion in August, making this the fastest $1 trillion run-up outside the COVID-19 pandemic, according to Treasury Department data.
The new total appears in Treasury’s daily statement of the government’s finances.
Rising debt over time ultimately fuels higher inflation and erodes purchasing power, said Kent Smetters of the University of Pennsylvania’s Penn Wharton Budget Model, who served in the Treasury Department under President George W. Bush.
The Government Accountability Office has warned that growing federal debt can push up borrowing costs for mortgages and auto loans, suppress wages as businesses invest less, and make goods and services more expensive.
“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 weakens consumers’ buying power, he said.
The Trump administration says its policies are slowing spending growth and shrinking the deficit. From April through September, the cumulative deficit totaled $468 billion, Treasury officials said. Treasury Secretary Scott Bessent posted on X on Wednesday that it was the lowest reading since 2019.
“During his first eight months in office, President Trump has reduced the deficit by $350 billion compared to the same period in 2024 by cutting spending and boosting revenue,” White House spokesman Kush Desai said, adding that the administration will pursue faster growth, lower inflation, tariff revenue, lower borrowing costs, and cuts to waste, fraud and abuse.
The Joint Economic Committee estimates the national debt has increased by $69,713.82 per second over the past year.
“Reaching $38 trillion in debt during a government shutdown is the latest troubling sign that lawmakers are not meeting their basic fiscal duties,” said Michael Peterson, chair and CEO of the Peter G. Peterson Foundation. Interest costs are now “the fastest growing part of the budget,” he said, noting the U.S. spent $4 trillion on interest over the last decade and is projected to spend $14 trillion over the next 10 years.
The U.S. hit $34 trillion in January 2024, $35 trillion in July 2024 and $36 trillion in November 2024.
