U.S. faces a recession if Congress doesn’t address the debt limit within 2 weeks, Yellen says

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Treasury Secretary Janet Yellen believes the economy would fall into a recession if Congress fails to raise the debt ceiling before an default on the U.S. debt.

• “It would be catastrophic to not pay the government’s bills,” Yellen said Tuesday. “I fully expect [default] would cause a recession as well.”

• President Joe Biden on Monday called on Congress to raise the debt limit this week and avoid even approaching near-certain economic turmoil.

The Secretary of the Treasury Janet Yellen on Tuesday said “I do regard Oct. 18 as a deadline. It would be catastrophic to not pay the government’s bills, for us to be in a position where we lacked the resources to pay the government’s bills,”. After on Monday President Joe Biden also called for congress to vote to raise the debt ceiling.

“Since mid-July, Republicans have clearly stated that Democrats will need to raise the debt limit on their own,” McConnell wrote to Biden on Monday. “For two and a half months, we have simply warned that since your party wishes to govern alone, it must handle the debt limit alone as well,” he added, in reference to the reconciliation effort.

Uncertainty looms over the US financial markets waiting for a decision on of the Republican party will vote to comply with the Democratic proposal to allow for more government spending.