As fiscal year 2025 looms, the U.S. federal government faces unprecedented fiscal headwinds. Yet with only one month to go, it has already spent a stunning $6.73 trillion. This is a 5.9 percent overall increase in spending from the same period in fiscal 2024. However, with the national debt spiraling toward a crisis level of $37 trillion, questions are increasingly being asked about the long-term viability and wisdom of such fiscal practices.
Over the past couple of years, the Trump administration has already exceeded last year’s spending level, triggering alarm bells concerning long-term fiscal solvency. The federal government is paying well over $1 trillion every year and it’s all going just to interest payments. This puts it second only to mandatory spending as the largest category of the federal budget.
With the fiscal year approaching its end, the 2026 appropriations bill is already poised to dramatically expand costs. This increase raises serious questions that go to the heart of our government’s fiscal policy. The analysts are saying the U.S. government is “tapped out.” That’s right, they claim it can’t even continue its current spending levels without racking up even greater debt.
On October 1, a partial government shutdown went into effect at midnight. This quickly became an inflammatory development that ratcheted up already high tensions and fears over U.S. economic stability. Indecision has led to a tremendous surge in gold prices. On October 2, they hit over $3,900 an ounce – albeit briefly. Silver had a great day too, trading well above $47 throughout the day with authority.
Metals specialists are this increase in precious metals mainly to economic and political unknowns.
“Gold continues to serve as an effective hedge against episodes of economic, political, and geopolitical risk and would likely perform well if a U.S. government shutdown proves longer or more disruptive than feared.” – USB analyst
Indeed, Gold’s value has skyrocketed by more than 87 percent over the past 21 months. This spike underscores gold’s storied status as a safe haven asset in times of crisis. Analysts from Citi emphasize that prolonged government shutdowns typically drive up gold prices, noting that “in longer shutdowns, gold catches a bid as uncertainty mounts, rallying 2 percent on average and holding that strength for a couple months.”
The current financial landscape reveals a pattern seen throughout U.S. history: every president since Calvin Coolidge has left office with a greater national debt than when they assumed office. Even President Bill Clinton, who presided over several years of budget surpluses, bequeathed the country an even higher debt burden.
In recent events, a proposed continuing resolution (CR) aimed at averting the shutdown included spending increases that many Democrats refused to support, despite being marketed as a “clean” bill. This political standoff is a flashpoint for the deeper and continued division within Congress over fiscal prudence versus spending priorities.
As the federal government continues to navigate these financial pressures, their potential impacts on domestic and global markets are unclear. High interest costs are increasing the cost of borrowing. The resulting diversion of public resources further limits investments in other critical services and programs.