![]() ![]() Given the disruption - which would impact anyone with a 401(k) or who relies on government programs - it's likely that the uproar would force the White House and Congress back to the negotiating table to quickly find a solution, experts say. ![]() How long could a debt-ceiling breach last? could fall into a "deep recession," with employers cutting 7.8 million jobs and the jobless rate jumping to 8%, or about double its current level, Zandi predicted. ![]() economy," Zandi wrote.īut if the breach lasted longer than that, the U.S. A short breach would be "enough to undermine the already fragile U.S. fall into a recession?Įven a short debt-ceiling breach of a week or less would likely tip the economy into a recession, Mark Zandi, chief economist of Moody's Analytics, said in a recent report. That would make a mortgage payment on a typical home 22% more expensive and likely "freeze" the market, the real estate company said. Mortgage rates could surge to 8.4% by September, up from 6.9% now, if the debt ceiling is exceeded, according to Zillow. It could get even more expensive to buy a home because a default would force the Treasury Department to pay higher interest on its bonds to convince investors to stick around - and mortgage rates and other borrowing costs tend to follow Treasury rates. How would a debt-ceiling breach impact mortgage rates? And consumers already owe almost $1 trillion on their charge cards, up 17% jump from last year and a record high. Credit card annual percentage rates are already at record highs, reaching almost 21%, the highest level since the Federal Reserve began tracking APRs in 1994. "My message to the world is, don't wait on that orthopedic surgery." Would it impact my credit cards?Ī breach would likely raise the broader cost of borrowing by pushing up interest rates, including on credit cards. Don't wait until June 1," Sara Rosenbaum, a health law and policy professor at George Washington University, told Axios. A combined 158 million people are enrolled in Medicare and Medicaid - almost half the U.S. What happens to Medicare and Medicaid?īoth could be disrupted, potentially impacting care for older Americans on Medicare and low-income households that rely on Medicaid. "It could be they decide, 'Hey, we aren't going to pay any government employees this week,'" noted Patrick Gourley, associate professor of economics at the University of New Haven, in an interview with Government Executive, a publication that covers the federal government. would need to decide what payments to prioritize with what money it still has available, and it could opt to continue paying interest on its bonds in order to avoid a debt downgrade rather than pay federal salaries. Would federal employees get paid?Īs Yellen noted, federal workers and members of the armed services might not get paid. defaults, "It is unlikely that the federal government would be able to issue payments to millions of Americans, including our military families and seniors who rely on Social Security," Yellen said in April. ![]()
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