President Joe Biden’s economic advisers have said that if the world’s largest economy fails to meet its financial obligations on time and this default is prolonged, the US labor market could lose more than eight million jobs this summer.
They added that if this doomsday scenario materialized, gross domestic product would contract by 6%, while financial markets, for their part, would lose 45% in the third quarter of the year.
But if the US were to witness a default for a short period, advisers to the White House Council of Economic Advisers expect the US economy to suffer from rising interest rates. unemployment and a weaker recession.
This issue is very risky in America, because the country has never defaulted on its debt.
Republicans are refusing to agree to raising the federal public debt ceiling, which is usually a routine procedure, unless Democrats agree to deep spending cuts first.
The administration warns that failure to raise the public debt ceiling will lead the United States to default on its $31.4 trillion debt, in historic precedent that would shock the United States and the world.
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