USA Debt Now Bigger than its Economy

SYNOPSIS

The US national debt has reached a record $37 trillion, surpassing GDP. Fueled by spending and tax cuts, soaring interest costs now exceed the defined budget, threatening long-term economic stability.

“USA debt mountain has officially outgrown its economy, raising big questions for the future”

The U.S. has crossed a historic threshold, its national debt has skyrocketed to $37 trillion, overtaking the economy itself, which stands at $30 trillion. This record-breaking rise is setting off alarms about America’s financial future.

Unexpected Rise of Debt

In 2024, the debt of the USA was 35.46 trillion dollars. This year, 2025, it reached a debt figure of 37.09 trillion, which arrived earlier than expected in 2030, according to congressional budget projections. The USA is adding about one trillion every five months, twice the average rate of the past quarter of a century.

Reasons for Rising Debt

The COVID-19 pandemic in 2020, which led to the shutdown of the U.S. economy, led the federal government to borrow a lot, and former President Joe Biden tried to stabilize the economy and support a recovery. However, under the Trump administration, more spending has been approved, and the new Republican tax cut and spending legislation is set to add 4.1 trillion of debt in the next 10 years.

Debt-to-GDP Ratio

The USA's national debt stands at 37 trillion dollars; it is surpassing the current GDP of the country, which is at 30 trillion. The debt-to-GDP ratio, a measure of fiscal health, has risen to 119.4% up from the pre-pandemic levels near 80% and is not far from the 2020 record of 132.8%.

Economic Impact for Americans

Higher debt levels can affect mortgage and credit card interest and the stability of the U.S. dollar. And Tariffs can increase the price of products like from smartphones to home appliances.

Who owns the debt to America?

• Private Investor: The largest shareholder owns two-thirds of the total $ 24.4 trillion

• The federal trust fund -Social Security and Medicare - holds another $7.3 trillion. The Federal Reserve owns $ 4.6 trillion in debt.

• Foreign Ownership- Japan (1.1 trillion dollars), the U.K. (809.4 billion USD) and China (756.3 billion USD)

• Others- Mutual funds, pension funds, banks, and state governments

Deficit and Trump's tariff

Trump's most recent tariff package is providing a short-term revenue bump with steep duties on significant products. Treasury figures show customs duties in July jumped 273%, generating approximately 21 billion dollars for that month.

Consequently, the US ran about 291 billion in the deficit in the month of July, which is up 20% from the same month last year. In the first ten months of fiscal 2025, the deficit totalled 1.629 trillion, a rise of 7% from the same period of the past year.

Interest costs are now bigger than defence spending.

The interest cost is the fastest-growing item in the federal budget. In fiscal 2024, the US paid 879.9 billion in net interest, surpassing both care (874.1 billion) and the defence budget. In 2025, the US owes approximately $1 trillion in interest. The average rate of federal debt has been increasing every year since 2022, jumping from 2.07% to 3.352% as of July 2025.

Conclusion

America's debt crisis is now real, and with the country facing $37 trillion in debt, more interest payments, and ever-increasing deficits, there is a dangerous financial path ahead. Tariffs and taxes may provide a quick solution for revenues, but these are not sustainable solutions. The United States needs real reform to address the responsibility of growth. If it does not, the burden of this debt will continue to weigh heavily on the economy as a whole - and the lives of millions of Americans.

Devin Jain