Debt Deal to Hit a US Economy Already Facing Recession Risk
- Fed policy makers have fresh consideration for rate outlook
- Federal government has been support for GDP in recent quarters
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The cap on government spending in Washington’s deal to raise the federal debt limit adds a fresh headwind to a US economy already burdened by the highest interest rates in decades and reduced access to credit.
The tentative deal crafted by President Joe Biden and House Speaker Kevin McCarthy over the weekend — assuming it’s passed by Congress in coming days — avoids the worst-case scenario of a payments default triggering financial collapse. But it also could, even if at the margin, add to risks of a downturn in the world’s largest economy.