U.S. debt default could wipe out 6 million jobs and $15 trillion in wealth, Moody's says
CBSN
The U.S. economy could plunge into another recession this fall if Congress fails to lift the debt ceiling and the nation is unable to pay its obligations, according to an analysis by Moody's Analytics chief economist Mark Zandi. The fallout would wipe out as many as 6 million jobs and erase $15 trillion in household wealth, he estimated in a report.
The debt limit is the maximum amount the U.S. is permitted to borrow to pay its debts. If the amount of government debt hits that threshold without lifting the ceiling by current mid-October deadline estimates, the U.S. would be unable to pay interest on the trillions it already owes and could default — something that has never happened in the nation's history.
In real terms, the nation would soon return to high unemployment rates, approaching 9% compared with its current rate of 5.2%. Also, come November 1 checks for millions of Social Security recipients would be delayed, Zandi noted. And stock prices would likely plunge by one-third, sparking that $15 trillion loss in household wealth. Meantime, mortgage rates and other interest rates for things like credit cards and auto loans would spike.
