Expectations of a US debt default are rising as Congress stalls on raising the debt ceiling. The US government is currently borrowing more money than it is taking in, and the debt ceiling is the limit on how much money the government can borrow. If the debt ceiling is not raised, the government will not be able to pay its bills and will default on its debt.
A default on the national debt would be a major economic event, and it would have a significant impact on the stock market, the economy, and the global financial system. Stocks would likely fall sharply in the event of a default, as investors would lose confidence in the US economy. A decline in the stock market would have a ripple effect throughout the economy, as businesses would see their profits fall and would be less likely to invest or hire new workers.
The debt ceiling is a political issue, and it is unclear when or if Congress will raise the limit. Investors will be watching closely to see how the situation unfolds, and they will likely be cautious about investing in the stock market until the debt ceiling is resolved.
The Congressional Budget Office (CBO) has warned that a default on the national debt would have a significant impact on the economy. The CBO estimates that a default would reduce GDP by 0.6% in the first year and by 0.2% in the second year. The CBO also estimates that a default would lead to an increase in unemployment of 0.2 percentage points in the first year and 0.1 percentage points in the second year.
The CBO's estimates are based on a number of assumptions, including the assumption that the government would not be able to make any payments on its debt after the debt ceiling is reached. If the government were able to make some payments, the impact of a default would be less severe. However, even a partial default would have a significant impact on the economy.
The risk of a US debt default is rising, and investors are becoming increasingly concerned. If Congress does not raise the debt ceiling, the US government will default on its debt, and the economy will suffer.
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