One of 144 business leaders, Goldman Sachs CEO David Solomon, has warned that the US stock market faces catastrophe if the congressional standoff over the debt ceiling is not resolved soon, according to Business Insider. Industry leaders have sent an open letter to President Joe Biden and congressional leaders, saying that urgent action is needed to prevent an impending debt crisis. The stock market is waiting for a catastrophe if American legislators do not vote to increase the debt ceiling soon, so it necessary to get out of the current impasse as soon as possible before the government runs out of money.
“We are writing to underscore the potentially catastrophic consequences of the federal government’s failure to fulfill its obligations. In the absence of a resolution, the government is likely to run out of money by June 1” bank leaders said.
The debt ceiling is the limit on the amount of money the government can borrow, set by Congress. On January 19, the limit was set at $31.4 trillion, but the Biden administration and the House of Representatives have not been able to agree on how to resolve the looming crisis.
Republicans will not vote to lift the limit unless the White House agrees to future spending cuts. Treasury Secretary Janet Yellen also said the X date, when the government runs out of money, could come as early as June 1.
Standard & Poor’s also downgraded the US to AA+, and according to Moody’s, the uncertainty has also led to a 0.7% increase in unemployment. The US economy is also suffering from high inflation and the recent collapse of regional banks Silicon Valley Bank and First Republic.