October 19, 2021

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US debt default could trigger another recession: Reports

US debt default could trigger another recession: Reports


Treasury Secretary Janet Yellen, left, and Federal Reserve
Image Source : AP

Treasury Secretary Janet Yellen, left, and Federal Reserve Chairman Jerome Powell, appear before a Senate Banking, Housing and Urban Affairs Committee hearing on the CARES Act on Capitol Hill.

United States debt default could trigger another recession, news agency AFP quoted Treasury Secretary Janet Yellen on Tuesday.

As per reports, Treasury Secretary Janet Yellen believes the economy may fall into a recession if Congress fails to address the borrowing limit before an unprecedented default on the U.S. debt.

Few days ago, Yellen told Congress that the Treasury Department will likely exhaust all of its “extraordinary measures” to avoid an unprecedented default on the government’s obligations by October 18.

Yellen warned Congress three weeks ago that the Treasury would run out of maneuvering room by mid-October.

In a Tuesday (last week) letter, she said economists were able to issue a specific date based on the amount of revenue the US had received in September from corporate and private quarterly tax payments.

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Yellen’s letter arrived the day after Senate Republicans blocked consideration of a bill to deal with the debt limit and approve a stopgap funding bill to avert a government shutdown Friday.

“We now expect that Treasury is likely to exhaust its extraordinary measures if Congress has not acted to raise or suspend the debt limit by October 18,” Yellen said.

“At that point, we expect Treasury would be left with very limited resources that would be depleted quickly.”

Yellen said it was uncertain whether Treasury could meet all of the nation’s commitments after that date.

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