Precisely in a phase in which the economic recovery in the United States is stalling, uncertainty about the increase in the debt limit by the American Congress weighs on the financial markets and the economy.
Treasury Secretary Janet Yellen has written another warning letter to MPs, announcing that the government will likely run out of money sometime in October.
This means that the government will then no longer be allowed to pay all the bills because otherwise it would have to exceed the statutory debt limit.
A few weeks ago the minister had already sent a warning in the form of a letter.
Winand von Petersdorff-Campen
Business correspondent in Washington.
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The debt limit has been in effect again since August 1st after being temporarily suspended.
Since then, the Treasury Department has been forced to keep expenditure and income roughly the same.
In return, Yellen suspended the endowment of various pension and health insurance funds for civil servants and public sector employees.
If all measures were exhausted and the cash was spent, then for the first time in its history the United States would fail to meet its financial obligations, warned Yellen urgently.
"Irreparable damage"
If Congress waits until the last minute to raise or override the debt ceiling, consumers and businesses will lose confidence, borrowing costs will rise, and the United States' rating will be up for grabs.
Yellen writes of "irreparable damage" to the American economy and global financial markets.
In the current situation in which many companies and families are suffering from the pandemic, it would be particularly irresponsible to shake confidence in America's creditworthiness.
The dramatic words are similar to those of their predecessors in office in comparable situations.
The White House recently recalled that Congress has raised or suspended the debt ceiling around 80 times in its history, three times under Biden's predecessor, Donald Trump.
But threatening gestures are coming from the Republicans: the influential MP in the House of Representatives, Kevin Brady, said he would not help the Democrats. In the Senate, 46 out of 50 Republicans have signed a letter opposed to raising the debt ceiling. The Democrats need a total of 60 votes in the Senate, but only have 50 themselves. The Republicans' line of argument is that the Democrats would not have seriously compromised with them for their large spending laws for infrastructure and social affairs and instead relied on a procedural trick of simple majorities allow. Now they should watch as they get the votes to raise the debt ceiling.
Yellen's warning letter went public on the same day that the Federal Reserve's Beige Book gave indications of economic conditions in various central banking districts. The bottom line of the deliberate collection of anecdotal evidence from across the country is that economic recovery has slowed while prices continue to rise. The hospitality industry in particular suffered because people once again cut back on travel and going out because of the highly contagious Delta variant of the coronavirus. However, delivery bottlenecks for raw materials, microchips and other goods also play an important role. After all, employers are complaining louder and louder about their problems in finding suitable staff. Out of twelve central bank districts, only three reported solid or strong growth.
Analytics firm Oxford Economics has scaled back its growth expectations for the United States. It now expects an increase of 5.5 percent for this year after more than halving the forecast for the annualized growth rate for the third quarter to 2.7 percent. Rising wages and households' finances, which are already healthy by historical standards, should nevertheless spur consumption. Despite disappointing labor market figures recently, Oxford Economics sees progress on the labor market. Economists, on the other hand, do not fear galloping inflation.