New forecast: US default on June 5th instead of June 1st

The deadline for raising the US debt ceiling is later than previously expected. According to a new estimate, US Treasury Secretary Yellen said the impending default should be avoided by June 5 instead of June 1.

US Treasury Secretary Janet Yellen has renewed her warning of a possible US default. “Based on the latest data,” Yellen wrote in a letter to Republican Speaker Kevin McCarthy, the government must raise the debt ceiling by June 5 to meet its obligations. The finance minister had earlier referred to June 1 as “Day X” several times.

However, in a letter to Congress, Yellen again warned that failure to act on raising the borrowing limit would have serious economic and financial consequences beyond the country.

Consent only against cuts in the state budget

In Washington, debate over raising the debt ceiling from the current $31.4 trillion has been going on for weeks. For the increase, President Joe Biden’s Democrats need the support of Republicans, who hold a majority in the House of Representatives.

In return, Republicans want to get their approval for budget cuts in 2024. However, so far the Democrats have not accepted their demands.

Opposition leader McCarthy spoke of “progress” in talks with the White House on Friday. US President Biden was also optimistic and expected an agreement to be reached soon.

Statements on Draft Law

Several US media previously reported a reconciliation. Accordingly, the debt ceiling could be raised for two years, limiting federal spending beyond the November 2024 presidential election. According to a report by the New York Times, Democratic and Republican negotiators have already begun drafting a bill.

Hopes of a turnaround also weighed on US stock markets. They went into the weekend with significant gains. Current economic data is overall better than expected.

Now first Holiday weekend

However, House negotiators returned to Washington for the long holiday weekend, and President Joe Biden also plans to spend the coming days at Camp David and his country estate in Wilmington. Monday is Memorial Day.