House Speaker Kevin McCarthy's ouster could hurt the U.S. economy, according to some financial experts.
A government shutdown could prompt Moody's to downgrade U.S. debt. A last-second continuing resolution agreed to on Sunday kept the government funded until Nov. 17, but McCarthy forged a deal with Democrats to make it happen.
Some hard-line Republicans, including the eight who voted to oust McCarthy, might not be so amenable.
"While government debt service payments would not be impacted and a short-lived shutdown would be unlikely to disrupt the economy, it would underscore the weakness of U.S. institutional and governance strength relative to other AAA-rated sovereigns that we have highlighted in recent years," Moody's wrote.
"In particular, it would demonstrate the significant constraints that intensifying political polarization put on fiscal policymaking at a time of declining fiscal strength, driven by widening fiscal deficits and deteriorating debt affordability," Moody's said.
Financial markets were tumultuous the day before McCarthy's ouster. The Dow fell 430 points and the S&P 500 declined 1.4%. The bond market saw the biggest damage. The yield on a 10-year Treasury bill topped 4.7 percent Tuesday morning, a 16-year high.
Fears of a recession loom.
"Yields and oil are the big stories. Those have the biggest economic consequences. And they're coming at a time when the economy's especially fragile," Callie Cox, U.S. investment analyst at eToro, told the Hill.
"But these political headlines aren't helping things and they probably are making investors more jittery, even though the economic impacts are likely to be more limited."
Solange Reyner ✉
Solange Reyner is a writer and editor for Newsmax. She has more than 15 years in the journalism industry reporting and covering news, sports and politics.
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