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Severe default hanging over US economy as Sword of Damocles
Dark clouds are gathering over the American economy. A large-scale default seems realistic as early as this summer.
According to US Treasury Secretary Scott Bessent, the United States could face a default on its national debt by the end of the summer. It appears that the country will be forced to confront a multitude of payment challenges.
In Bessent’s assessment, the government may run out of funds to service its more than $36.9 trillion debt sometime in mid-to-late summer. “It’s impossible to give an exact date, as this is a moving target,” he noted.
Back in May, the Treasury Secretary warned that the US is on a “concerning path,” finding it increasingly difficult to stay within the federal debt limit. He pledged to notify Congress as soon as the Treasury approaches “X-date”, the point at which the government will no longer be able to pay all of its bills. At the same time, Bessent assured that the US government would not declare default, nor would it use “gimmicks” to bypass the debt ceiling.
Previously, in December 2024, President Donald Trump urged lawmakers not to cap the country’s debt. He stated that no deal on a temporary budget could be reached without addressing the issue. “Congress must eliminate the ridiculous debt ceiling or extend it through roughly 2029,” the president emphasized.
© InstaFintech Group
