At Globe Live Media we explain what could happen if the US Congress does not raise the debt ceiling.
A new report published by Moody’s Analytics revealed extremely worrying data for the US economy: approximately 6 million jobs are at risk of being lost if the federal government does not raise the debt ceiling soon, because, in this In this case, the United States would fall into default and would not be able to meet all of its financial commitments.
This would be one of the devastating consequences of Congress not raising its debt ceiling soon. The Moody’s Analytics report also indicated that the unemployment rate would increase to 7% (double that registered in December by the Bureau of Labor Statistics), and that US households would lose approximately $12 trillion dollars.
According to Mark Zandi, chief economist at Moody’s Analytics, the country could lose approximately 4% of its gross domestic product (GDP) if steps are not taken to avoid government default.
Various analysts believe that the US economy could, in fact, suffer a blow similar to the financial crisis of 2007-2008, and that there could be a recession if the US government defaults.
According to GoBankingRates, the debt ceiling has been adjusted 78 times since 1960. The last time it was adjusted was in December 2021, when it was increased by $2.5 trillion. Now, however, raising the debt ceiling has become a political battle between Democrats and Republicans.
The Republican Party has indicated that it will approve a renegotiation of the debt ceiling only if cuts in public spending are carried out. However, the White House has refused to accept such a proposal.
Hitting the debt ceiling could, in fact, have far more damaging effects on Americans’ pocketbooks, such as delaying their Social Security payments. It could even harm their 401(k) savings plans, one of the essential instruments that American workers have to guarantee funds for their retirement.
Melissa Galbraith is the World News reporter for Globe Live Media. She covers all the major events happening around the World. From Europe to Americas, from Asia to Antarctica, Melissa covers it all. Never miss another Major World Event by bookmarking her author page right here.