2023-05-16 16:16:33
© Reuters. United States Secretary of the Treasury, Janet Yellen 05/11/2023. Shuji Kajiyama/Pool via REUTERS
WASHINGTON (Reuters) – U.S. Treasury Secretary Janet Yellen warned on Tuesday that a U.S. default on government debt would leave millions of Americans without payments, potentially triggering a recession that will destroy many jobs and US companies.
Yellen told a meeting of bankers that the unprecedented economic and financial crisis will be exacerbated by potential disruptions to federal government operations, including air traffic control, law enforcement, border security and national defense and telecommunications systems.
The ensuing financial crisis could multiply the severity of the downturn, she said in prepared remarks, adding: “It is very conceivable that we will see a number of financial markets crash, with global panic triggering margin calls, runs and strong selling.”
Yellen told Congress on Monday that the Treasury expects to be able to pay the U.S. government’s bills only through June 1 without an increase in the debt limit, increasing pressure on Republicans in Congress and the White House to reach a deal. in the next days.
Failure to reach an agreement will result in severe economic and financial consequences, she said.
“Our economy will suddenly find itself in an unprecedented economic and financial storm,” she said, adding that 66 million Social Security recipients and millions of veterans and military families will be left without payments. “And the resulting income shock could lead to a recession that will destroy many American jobs and businesses,” she added.
(By Andrea Shalal)
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