." These measures, which basically entail shifting funds around behind the scenes, free up cash for the federal government in the short term.These maneuvers have helped prevent a potential calamity: a default.
We'd be in uncharted territory ... and the consequences to the U.S. economy would be highly uncertain and could be quite averse.The U.S. has never "intentionally" defaulted on its debt, Council of Economic Advisers economists. This outcome is the one that would cause "irreparable harm," Treasury Secretary Janet Yellen warned in January.
That risk comes at a time when the U.S. economy is already bracing for potential recession over the 12 to 18 months, due to its absorption of higher interest rates and a banking crisis that is "still simmering," Zandi said.The exact date of a U.S. default — known as the "X date" — is difficult to pinpoint due to the volatility of government payments and revenues.Monday that the X date could be in early June and possibly as soon as the first day of the month.
— such as Social Security, Medicare and Medicaid, and federal aid related to nutrition, veterans and housing — on time, the CEA said. Government functions such as national defense may be affected, if the salaries of active-duty military personnel are frozen, for example. The U.S. would shed 500,000 jobs and the national unemployment rate would increase by 0.3 percentage point in the third quarter of 2023 if there's a short default, the CEA
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