US On The Brink Of A Debt Crisis: What's Behind It? An Explainer

The United States has seen its national debt swell beyond $38 trillion. This amounts to a debt load exceeding $114,000 per individual.

As per the US Treasury’s official website, the national debt currently stands at $38.39 trillion.

During a little more than two months, the debt climbed by $1 trillion, representing one of the fastest jumps outside pandemic-related surges, according to a Fortune report.

With deficits expanding and interest payments increasing, the fiscal outlook grows increasingly precarious. A common perception among Americans is that the dollar’s role as the world’s reserve currency acts as a financial safeguard. However, this protection is far from absolute. 

Michael A. Peterson, CEO of the Peter G. Peterson Foundation, told Fortune that it is “the latest troubling sign that lawmakers are not meeting their basic fiscal duties.”

He added that “it seems like we are adding debt faster than ever, that’s because we are. We passed $37 trillion just two months ago, and the pace we’re on is twice as fast as the rate of growth since 2000.”

The figures reveal a rapidly accelerating issue. Public debt surged from $35 trillion in mid-2024 to surpass $38 trillion by late 2025: an increase of around $3 trillion in just 18 months. This places the debt burden at more than $110,000 for every American.

With interest rates climbing worldwide, the cost of borrowing could rise steeply, leading to higher mortgage payments, pricier loans, and a slowdown in economic growth.

FY2025 saw Washington’s deficit swell over $2 trillion, driven by escalating interest obligations, mandatory expenditures and modest revenue increases.

Many economists now regard this fiscal course as untenable unless comprehensive policy changes are introduced. Interest payments alone are increasing faster than major federal initiatives, adding billions of dollars in new financial strain every month.

Former member of President Clinton’s Council of Economic Advisers and Harvard professor Jeffrey Frankel states that the US debt must stop its relentless expansion.

However, he notes that the likeliest outcome may also be one of the most difficult to bear.

In an op-ed published by Project Syndicate, Frankel examined potential remedies for US debt, including accelerated economic growth, reduced interest rates, default, inflation, financial repression, and fiscal austerity.

“Eventually, in the unforeseeable future, austerity may be the most likely of the six possible outcomes,” he wrote.

“Unfortunately, it will probably come only after a severe fiscal crisis. The longer it takes for that reckoning to arrive, the more radical the adjustment will need to be,” he added.