The US government’s gross national debt has crossed $38 trillion, dangerously close to the combined economic valuations of China, India, Japan, Germany, and the United Kingdom.
According to the latest Treasury Department data, the debt has grown by $1 trillion since August, at one of the fastest paces of accumulation seen in US history, outside the COVID-19 pandemic years.
Federal data shows debt-to-GDP ratio deficit
Over the past century, the federal debt has expanded from $380 billion in 1925 to $38 trillion in 2025, according to the US Treasury data. For the 2025 fiscal year, the country’s average GDP stood at $30.12 trillion, below the recorded debt of $37.64 trillion.
This produced a debt-to-GDP ratio of around 125%, which means policymakers and the central bank have to scratch their heads to find out how the government can repay its obligations before the fiscal year ends.
Kent Smetters, director of the Penn Wharton Budget Model and a former Treasury Department official under President George W. Bush, said the debt load is a ticket to higher inflation and reduced household purchasing power.
“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. That additional inflation compounds and erodes consumers’ purchasing power,” he told news publication AP.
The Government Accountability Office’s (GAO) report released in early October revealed that a ballooning debt translates to higher borrowing costs for mortgages, car loans, and credit cards, as lenders demand more compensation for risk.
Businesses may also have their access to capital reduced because the government is competing with them for finance, leading to lower wages and even lesser job opportunities.
Federal debt is divided into two categories: that held by the public and intra-governmental holdings. Debt held by the public, which includes investors, foreign governments, and the Federal Reserve, has reportedly risen by 131% since 2015.
Intra-governmental holdings, or debt owed by one part of the government to another, have increased by 46% over the same period.
The Congressional Budget Office (CBO) recently reported that the federal deficit for fiscal year 2025 reached $1.8 trillion, as America’s debt load soared past $38 trillion in a record climb. Although tax revenues rose by more than $300 billion, government expenditures increased by a similar amount, leaving the deficit unscathed in real terms.
Policy debate: What can Congress and the Fed do?
Republican lawmakers and several centrist Democrats have been bashing President Donald Trump’s camp for “letting the debt rise.” Congress has done little to curb spending or reduce deficits, even with the help of Elon Musk-founded government expenditure watch Department of Government Efficiency (D.O.G.E)
“Along with increasing debt, you get higher interest costs, which are now the fastest growing part of the budget. We spent $4 trillion on interest over the last decade but will spend $14 trillion in the next 10 years,” said chief executive of the Peterson Foundation Michael A. Peterson.
Yet, the Trump administration insists its policies are beginning to slow the pace of spending. A Treasury Department analysis covering the period from April to September showed a cumulative deficit of $468 billion, the lowest since 2019.
Treasury Secretary Scott Bessent mentioned the improvement on social media, noting that President Trump has reduced the deficit by $350 billion during his first eight months in office compared with the same period in 2024, Cryptopolitan reported.
“Tariff revenue could top $300B this year, helping lower the deficit and reduce the national debt for the American people,” he wrote on X back in August.
White House spokesman Kush Desai also said in a statement the administration is committed to “economic growth, lower inflation, tariff revenue, lower borrowing costs, and cuts to waste, fraud, and abuse.”
The Joint Economic Committee estimates that the national debt has increased by $69,713.82 every second over the past year. Calculating the overall figure with household data, every US citizen has a $111,000 deficit to pay, and every house’s share of the cake stands at $287,000.
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