WASHINGTON — America could plunge into an immediate recession if Congress fails to raise the debt ceiling and the U.S. defaults on its payment obligations this fall, according to one analysis set to be released Tuesday.
Mark Zandi, chief economist at Moody’s Analytics, found that a prolonged impasse over the debt ceiling would cost the U.S. economy up to 6 million jobs, wipe out as much as $15 trillion in household wealth, and send the unemployment rate surging to roughly 9% from around 5%.
Lawmakers in both parties agree that the debt ceiling must be raised to avoid economic calamity, but their standoff over how to do so has intensified. Despite increasing the national debt by close to $8 trillion under former President Donald Trump, Republicans have been adamant that they will refuse to help Democrats increase the debt ceiling in opposition to President Joe Biden’s spending plans. The Department of Treasury has said it will exhaust its “extraordinary measures” to pay the U.S. obligations sometime in October, giving lawmakers little time to act to head off calamity.