In the midst of the prolonged shutdown of the federal government, the public debt of the United States has surpassed the all-time high of $38 trillion, recording the fastest $1 trillion increase outside of a pandemic period.

According to the latest US Treasury report, the country touched $37 trillion in August 2025, with the spike to $38 trillion a strong indication of accelerating fiscal strain.

Kent Smeters, a professor at the University of Pennsylvania and former Treasury official under George W. Bush, warned that ever-rising debt leads to higher inflation in the medium term, reducing Americans’ purchasing power.

The Congressional Audit Office (GAO) describes the consequences of this phenomenon:

–Increasing borrowing rates for mortgages and consumer loans,
–Decrease in wages due to limited investment by businesses,
-And an increase in the cost of goods and services.

“Most people want to know that their children and grandchildren will have a future, that they will be able to buy a home,” Smeters said. “Additional inflation erodes that possibility.