america default update us economy news recession in us
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Earlier, White House economists had warned that if the US defaults, it will result in the loss of 8.3 million jobs in the country, the stock market will be wiped out by half, GDP will fall by 6.1 percent and the unemployment rate will increase by five percent. Interest rates in the country have reached their highest since 2006, the banking crisis continues to deepen and the dollar is getting thinner. The probability of recession in the country is 65 percent. If America defaults, it is sure to get stuck in recession. Its effect can be seen on the whole world including India.
what is the problem
The debt limit is the limit up to which the federal government can borrow. Since 1960, this limit has been increased 78 times. Last time it was increased to $ 31.4 trillion in December 2021. But it has gone beyond this limit. The US has never defaulted so far, so it cannot be said for sure what its effect will be. The debt to GDP ratio in the country has reached 120 percent in the year 2022, which is more than during the Second World War. After the Second World War, it was 114% in the year 1945. It is believed that America’s debt could reach $ 51 trillion by 2033. That is, in the next ten years, it can increase by $ 20 trillion.
According to Moody’s Analytics Chief Economist Mark Zandi, if America defaults, millions of people may lose their jobs and the country may be in the grip of recession. Due to this, 70 lakh people can lose their jobs and the country can get trapped in financial crisis like 2008. In 2011, the US was on the brink of default and the US government’s perfect AAA credit rating was downgraded for the first time. This led to a huge decline in the US stock market, which was the worst week since the 2008 financial crisis.
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