The White House added in statements on Thursday that the crisis will cost the US economy hundreds of thousands of jobs and slow growth in the world’s largest economy.
The White House has urged the U.S. House of Representatives to work together to reach an agreement to raise the debt ceiling that spares the United States the repercussions of a default on its debt.
The White House said markets were “under pressure” over fears of defaulting on government debt.
During Thursday’s session on the American markets, the “Dow Jones” industrial index fell by 330.6 points, or 0.99%, to reach the level of 33083.61 points, at 6:55 p.m. GMT.
The Standard & Poor’s 500 index also fell 28.5 points, or 0.69%, to 4,063.42 points.
The Nasdaq Composite Index also fell 50 points, or 0.38%, to 11,979 points.
For his part, Mark Zandi, chief economist at Moody’s Analytics, said in a speech before the US Senate on Thursday that the plan proposed by the Republicans to cut federal spending in exchange for an increase in the debt ceiling of the US government would reduce the pace of employment. and slow economic growth and “significantly increase” the likelihood of a recession in America.
Zandi said the implementation of the plan proposed by the Republican Party will raise gross domestic product growth in the United States in the year 2024 to 1.61%, compared to 2.23% if the plan is not. not implemented, in addition to this, the plan reduce job creation by about 790,000 jobs in the same year.
Republicans are pressuring US President Joe Biden, a Democrat, to agree to spending cuts as a condition for raising the self-imposed US debt ceiling to $31.4 trillion.
Democrats, meanwhile, see the need to agree to raise the debt ceiling without preconditions.
On Wednesday evening, President Joe Biden’s economic advisers said that if the world’s largest economy does not meet its financial obligations on time, and this default is prolonged, the American 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 would lose about 45% of their value 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.
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