The U.S. national debt has surged past $37.3 trillion as of early 2025, with debt held by the public at nearly $29.7 trillion—roughly 124% of GDP.
Over the past 15 years, the debt has doubled, and projections suggest it could reach 129–140% of GDP by 2034. Interest payments alone are expected to hit $952 billion in 2025, up 8% from last year, and may rise to $1.8 trillion by 2035. While the debt’s growth rate is currently around 4–6% annually, its long-term sustainability depends heavily on interest rates and GDP growth. If interest costs outpace economic growth, a dangerous “snowball” effect could develop.
Despite concerns, the U.S. is not currently in a recession. Key indicators like inflation (2–3%), unemployment (3.5–4%), and real GDP growth (around 2–3%) suggest relative stability. However, high debt levels limit the government’s ability to respond to future crises, and rising interest costs are crowding out fiscal space. A shock—such as a geopolitical conflict or a debt ceiling crisis—could quickly turn the tide. Analysts warn that investor confidence is critical; without it, borrowing costs may spike and trigger a downturn.
A potential war with Iran could significantly worsen U.S. debt and inflation. Estimates suggest it may add $5.8–$11.7 trillion to the national debt by 2034, potentially reaching $56 trillion in extreme cases—similar to the $6.4 trillion spent on Iraq and Afghanistan. Oil market disruptions could push inflation above 7%, eroding purchasing power and driving up borrowing costs on mortgages, credit cards, and loans.
For U.S. households, this could lead to higher interest payments, reduced real wages, and potential tax hikes or spending cuts. While the dollar’s reserve status offers some protection, prolonged conflict or policy mistakes could erode that advantage. Though a recession isn’t imminent, rising debt, interest costs, and global tensions make the outlook fragile — with lower- and middle-income Americans likely to bear the greatest impact.