U.S. Department of the Treasury warns of a near default
United States Treasury Secretary Janet Yellen has said that the United States may run out of money to pay its obligations by June 1 if Congress does not raise or suspend the debt limit.
The New York Times reported this.
The Department of the Treasury has previously warned that the so-called "X date" may come as early as June 1, after which the federal government may face the possibility of default on its debt.
In a letter to lawmakers, Ms. Yellen warned that the actual date that the federal government could run out of cash could be a number of days or weeks later than these estimates.
As the article says, Yellen's letter is the latest warning about the government's precarious financial situation.
"Waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States," Ms. Yellen said.
The Department of the Treasury has been using accounting maneuvers known as extraordinary measures to keep paying the country’s bills without breaching that USD 31.4 trillion debt ceiling, which was officially reached on January 19.
Ms. Yellen did not announce any additional measures that she is planning to take to conserve cash. Budget experts have projected that if the government can find sufficient resources to pay its bills through mid-June, then an influx of quarterly tax receipts could provide additional breathing room until later in the summer.
Note that in July 2022, JPMorgan announced that the United States economy is one step away from recession. In September 2022, US stock indexes fell to a two-year low.
In March 2023, Jamie Dimon, the CEO of JPMorgan Chase & Co, said that the war in Ukraine had become the main problem for the US economy. It was reported that the US is still hoping for a relatively mild recession.
On February 7, 2023, United States Treasury Secretary Janet Yellen warned Congress that the country could default on its financial obligations as early as June. Yellen also noted that a "global financial crisis" could occur if an agreement on debt limitation is not reached.
As of April 22, 2023, for the first time in 12 years, the risks that the US will not pay its debts have grown to a maximum. The cost of insuring the US government debt has risen to its highest level since 2011.