Goldman Sachs has predicted that unless the US resolves its current debt issue, it will exhaust its cash reserves within the next three weeks.
According to the financial institution, the cash reserves held by the Treasury Department are anticipated to fall beneath $30bn (£24.1bn) by either June 8 or June 9. This is the absolute bare minimum required for the world’s largest economy to fulfil its commitments.
Economists from the bank, Alec Phillips and Tim Krupa cautioned that their predictions are “open to significant uncertainty.” Therefore, there’s “definitely a possibility that income could decrease more rapidly than anticipated, leaving the Treasury with insufficient cash as early as June 1 or 2.”
The Treasury has been progressively depleting its cash balance to fulfil federal payments, as it can’t augment its net borrowing from the public due to the $31.4 trillion debt ceiling.
A crucial meeting concerning the debt ceiling between President Joe Biden and House Speaker Kevin McCarthy is scheduled to take place at the White House today.
If the US defaults on its debt, it is highly likely to trigger a recession in its domestic economy, which could result in negative repercussions for global economies.
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