Goldman Sachs’s top economist warned that the U.S. debt ceiling crisis could spark recession and market chaos. In an interview with CNN, Jan Hatzius, Goldman Sachs chief economist said in a statement. He pointed out that if the U.S. government has doubts in paying in the principal payments, there would be severe consequences around the world. Last week’s debt ceiling hit the United States. This led Janet Yellen, the U.S. Treasury Secretary to avoid breaching the $31 borrowing limit. Hatzius added that Congress should not fail in lifting the debt ceiling in time. If so, there would be a chance of missed payment or potentially to be the most important asset in the global market.
Sure that the debt is alarming and it is not only the figure of $31 trillion plus that becomes a problem. The deby ia a percentage of gross domestic predict that broadcasts the measure of the U.S. economy. In post pandemic, this debt represents 120% of GDP. This percentage is historically high, or it is even higher after World War II. The Treasury Department attempts to make interest payments and calls this as extraordinary measures. It means that Biden and Congress have time until June to realize the agreement to raise the debt ceiling.
The media assumes that this time could be different although they could play out politically. This is because a larger portion of GOP lawmakers seem to allow the country to default. In addition, Biden would not enact the spending cuts only to satisfy them. However, it is still debatable over the raise of the debt ceiling.
