Even Flirting With U.S. Default Takes Economic Toll
Financial markets are still betting that Congress and the White House will strike a deal. But the uncertainty alone is having consequences.
Lydia DePillis and
As negotiations over the debt limit continue in Washington and the date on which the U.S. government could be forced to stop paying some bills draws closer, everyone involved has warned that such a default would have catastrophic consequences.
But it might not take a default to damage the U.S. economy.
Even if a deal is struck before the last minute, the long uncertainty could drive up borrowing costs and further destabilize already shaky financial markets. It could lead to a pullback in investment and hiring by businesses when the U.S. economy is already facing elevated risks of a recession, and hamstring the financing of public works projects.
