A US Debt Crisis Will Arrive Sooner as Banking Turmoil Hits the Economy And Federal Revenue, Strategist Says
- A US Debt Crisis Will Arrive Sooner as Banking Turmoil Hits the Economy And Federal Revenue, Strategist Says
by Filip De Mott, https://markets.businessinsider.com/
* Tighter lending due to the banking crisis will slow the economy, resulting in less federal revenue.
* So Congress will have to lift the debt ceiling sooner than anticipated, a Stifel strategist said.
* “Receipts to the government — all those cash flows — are probably going to slow.”
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The banking turmoil could accelerate urgency on the debt ceiling, according to Brian Gardner, Stifel’s chief Washington policy strategist. This is because as banks become more cautious with lending in the wake of Silicon Valley Bank’s collapse, the economy as a whole will cool and limit the amount of revenue the government receives, he told Yahoo Finance Live.
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“We’re probably going to see a slowing down of the economy, a little contraction of credit. So receipts to the government — those cash flows — are probably going to slow,” he said.
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The US officially hit its $31.6 trillion debt limit in January, and lawmakers have been deadlocked on raising it. Since then, the Treasury Department has used “extraordinary measures” to continue servicing US debt payments.
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