The Rising Risk of a US Debt Default and Its Economic Impact

JPMorgan analysts warn that there is a 25% chance that the US government will fail to raise the debt ceiling and default on its debt, as President Biden and Republicans struggle to strike a deal ahead of the looming June deadline. The Treasury Department would prioritize principal and interest payments on the debt to avoid a technical default, but there would still be several adverse effects, including a likely downgrade of the US credit rating. The debt ceiling is the legal limit on the total amount of debt that the federal government can borrow on behalf of the public, and failure to raise or suspend it could have serious negative economic implications.