Economists are growing worried that lawmakers in Washington are getting dangerously close to budget deadlines, which may be negative for financial markets in the next few weeks.
Forecasters in a monthly survey by The Wall Street Journal estimate on average a 22 percent chance that the government will shut down at the end of September, and a 17 percent possibility that the U.S. Treasury will miss payments. Those outlays include federal payrolls and Social Security checks.
Lawmaker returning from the August recess face two important deadlines. Congress needs to decide whether to raise the debt ceiling by Sept. 29, which would give the Treasury the authority to borrow more money. The following day is the end of the fiscal year and the deadline for Congress to approve legislation to keep the government running.
“The annual games of Debt Ceiling Roulette and Federal Budget Chicken pose greater risks than ever this year,” Amy Crews Cutts, chief economist of the credit reporting agency Equifax, told the newspaper.
Economists estimate a 6 percent chance the U.S. will default on debt payments, a low possibility but still double the risk from a survey earlier this summer.
“Default would have quick and severe effects on the economy that no party wants to bear,” said Brian Schaitkin, senior U.S. economist at the Conference Board.
President Donald Trump’s inability to repeal and replace his predecessor’s healthcare law have cast doubts on other campaign pledges, including tax reform and trillion-dollar spending on roads, bridges and airports.
“A growth-oriented tax package could lead to a surge in business investment,” Stephen Stanley, chief economist of Amherst Pierpont Securities, told the WSJ. “If nothing gets done, disappointment could set in.”
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