10:34
+20 C°
Traffic jam:   5
$
52.9699
55.8886

U.S. debt default could trigger another recession

6 October 2021
2509
2 min.
8
U.S. debt default could trigger another recession

What a US debt default would mean for the market

Congress is approaching the mid-October deadline to raise or suspend the debt ceiling, but Democrats and Republicans on Capitol Hill are in a stalemate with no clear plan to prevent what would be the first default in the US.

There are no signs that the partisan battle is coming to an end: Senate Majority Leader Chuck Schumer plans to hold a vote on Wednesday on a House measure to suspend the legal debt ceiling until December 2022, but Senate Minority Leader Mitch McConnell has already done so. pledged to block the effort the third time Republicans have done so.

With control of the White House as well as both houses of Congress, Democrats face increasing pressure to act alone and raise the ceiling using a procedural tool known as reconciliation, which allows them to bypass Senate Republicans' obstruction.

The Treasury Department has begun implementing so-called emergency measures to keep the government running after restoring the debt limit in August to about $22 trillion, about $6 trillion less than the actual level. But Congress has little time to deal with the issue: Treasury Secretary Janet Yellen has told Congress that the limit must be raised by 18 October or the US government will run out of cash to pay the bills.

"I consider October 18 to be the deadline. It would be a disaster not to pay the government's bills if we find ourselves in a position where we don't have the resources to pay the government's bills," Yellen told CNBC on Tuesday.

According to experts, the economic consequences of a debt default are likely to be severe: interest rates are likely to rise and demand for Treasury bonds will fall; even the threat of default could lead to higher borrowing costs. According to one analysis by the Bipartisan Policy Centre, once the US runs out of money, the Treasury will be unable to meet around 40% of all payments over the next few weeks.

Persons3 and Companies5 in the news

Chairman of Federal Reserve Board
1 place
United States Senate majority leader
2 place
Senior United States senator from New York
3 place
CNBC
2 place
White House
5 place
Section:

Discussion

Rating companies
Nasdaq
192 Mention
Dow Jones
137 Mention
Apple
69 Mention
Tesla
60 Mention
Amazon
54 Mention
Facebook
53 Mention
Twitter
41 Mention

NEW YORK NEWS

News from GlobalNY.biz is the freshest and most relevant information about high-profile events in the region. The task of the resource's news feed is to convey to readers with maximum accuracy and objectivity information about important events in business, politics, economy, healthcare, culture and other spheres of life in New York.
GlobalNY.biz news is a coverage of economic processes taking place in New York, the latest news of public life, incidents and an overview of political events. New York news is information about the activities of small and medium-sized businesses, the work of housing and communal services and utilities, the implementation of significant projects.
The site's journalists describe not only the life of the region, but also talk about the current state of the US economy. Everything you need to know about innovations in the field of industry and agriculture, economy and power is collected in the "News" section at GlobalNY.biz.
New York news quickly informs the reader, shows the real picture and opens up hot topics. Communication with government structures and business enables us to provide our readers with reliable, information-rich material. The main page of the portal contains the key news of New York!
Alena Potapova

Development Director
Population
7961007088
Died this year
29198522
Born this year
71833532