We take a look at the ways a debt ceiling default could hit your own finances. We\u2019ll also look at how one big bank is preparing for a default and why the 1980s are haunting the Federal Reserve.
\n5 ways a federal debt default could hurt Americans
\nAmericans are getting a crash course on the country\u2019s borrowing limit, as a high-stakes standoff on Capitol Hill dominates national attention.
\nExtraordinary measures the Treasury Department is taking to temporarily stave off a default are expected to give Congress until at least June to reach a deal to raise the limit.
\nBelow are just a few of the reasons, experts say, the U.S. can\u2019t afford to default.
\nRecession is almost certain: Recession fears have already been on the rise for months, as economists and lawmakers have paid close attention to the Federal Reserve\u2019s ongoing interest rate hikes in response to high inflation.
\nInflation could lower \u2013 but at a steep price: Experts say inflation could also lower, but not in the way most would hope. Some say prices would fall as a result of a slower economy in such circumstances as demand weakens, but not if they were already hindered by shortages.
\nStock market takes a tumble: Stock portfolios would take a serious hit if the nation defaulted on its debt, sapping retirement accounts and draining crucial sources of revenue for major companies.
\nThe conflict: GOP lawmakers have vowed not to vote to raise the debt ceiling without major spending cuts despite promising they would not let the U.S. default. Even so, Republicans have yet to unify behind any proposal to cut down the federal debt and are sparring over how much to cut defense spending, if at all.
\nAt the same time, Democrats have instead pressed for a clean bill to raise the debt limit without conditions, accusing Republicans of holding the economy hostage for their partisan goals.
\nLEADING THE DAY
\nWhy the 1980s recession haunts the Fed
\nThe ghost of the early 1980s recession is haunting the Federal Reserve.
\nWith inflation still near 40-year highs and the U.S. economy slowing, the Fed\u2019s aggressive rate hikes have fueled concerns of a central bank-induced recession akin to the one triggered by former Fed Chairman Paul Volcker\u2002during the 1980s. While Volcker\u2019s rate shock ended two decades of rising inflation, it did so at the cost of a severe recession.
\nFed Chairman Jerome Powell\u2002has frequently praised Volcker\u2019s refusal to back down and channeled that persistence into his own battle with inflation.
\nBut most economists believe Powell can wage a far less costly war against rising prices, given major shifts in the economy \u2014 and Fed policy \u2014 since the days of Volcker.
\n\u201cInflation looks like it has already peaked and never got near the 14.5 percent peak reached in 1980, so the Fed will not have to raise rates as high as it did back then,\u201d said Eric Swanson, an economics professor at the University of California, Irvine.
\n\u201cWe also benefit today from the experience that we gained back then: Everyone knows that inflation was high and was successfully brought down with high interest rates, so we know the Fed can do it again,\u201d he said. <\/p>\n
Bank of America\u2019s Moynihan says firm is preparing for US debt default
\nBank of America CEO Brian Moynihan\u2002on Monday said the firm is preparing for the U.S. to default on its debt after surpassing its borrowing limit last month.
\n\u201cWe have to be prepared for that, not only in this country but in other countries around the world. You hope it doesn\u2019t happen, but hope is not a strategy \u2014 so you prepare for it,\u201d Moynihan told anchor Poppy Harlow on \u201cCNN This Morning,\u201d noting the company is preparing as it would \u201cin a natural disaster.\u201d
\nMoynihan, who runs the nation\u2019s second-largest bank, said there\u2019s value in lawmakers debating across the aisle over what to do about the national debt but said \u201ceverybody has to\u201d batten down for a potential default.
\nBAD TO BETTER
\nAmericans\u2019 views of US economy tick up: poll
\nAmericans\u2019 positive views of the United States economy remains well below half, but have ticked up slightly over the past week, according to a new CBS poll.
\nThe new poll found that 33 percent of Americans think the condition of the economy is good, an increase from last week\u2019s number of 28 percent.
\nThat comes after Friday\u2019s blockbuster jobs report that showed the U.S. adding 517,000 jobs in December.
\nAs the nation\u2019s debt limit remains in limbo, more than half of Americans say that Congress should not raise the debt ceiling while 45 percent saying that it should. But when presented with the prospect of a default, 67 percent said Congress should raise the debt limit. <\/p>\n
Thehill<\/p>\n
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We take a look at the ways a debt ceiling default could hit your own finances. We\u2019ll also look at how one big bank is preparing for a default and why the 1980s are haunting the Federal Reserve. 5 ways a federal debt default could hurt Americans Americans are getting a crash course on the […]<\/p>\n","protected":false},"author":5,"featured_media":5375,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1155],"tags":[1235,1829,1702],"class_list":["post-5374","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-debt","tag-default","tag-federal"],"_links":{"self":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/5374","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5374"}],"version-history":[{"count":1,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/5374\/revisions"}],"predecessor-version":[{"id":5376,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/posts\/5374\/revisions\/5376"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=\/wp\/v2\/media\/5375"}],"wp:attachment":[{"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5374"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5374"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ustower.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5374"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}