- The US could default on its debt on June 8 or June 9, Goldman Sach’s chief political economist told Bloomberg.
- That’s about a week later than the June 1 “X-date” indicated by Treasury Secretary Janet Yellen.
- The X-date is when the US can no longer pay its bills if the debt ceiling isn’t raised.
All eyes are on the US debt ceiling right now, and there might be some good news ahead.
Treasury Secretary Janet Yellen has previously said the “X-date,” or the date when the US can no longer pay its bills and risks a default, is June 1.
But the actual deadline could be a week later than June 1, Alec Phillips, Goldman Sachs’ chief political economist, told Bloomberg TV on Friday.
“Our guess right now is that the real deadline is probably more like June 8th, 9th, that’s when they’re at sort of greatest risk,” Phillips said.
Phillips did not explain the X-date calculation in the interview. But these forecasts could vary because these calculations depend on the amount of taxes and other revenue the US government collects versus how much it spends.
While that may buy the US more time to negotiate a deal over raising the debt ceiling, it’s still better to do it sooner or later, Phillips added.
“The reality is that Congress has to do this at some point very soon, and they should just go ahead and do it,” Phillips said. “So waiting for the last minute isn’t necessarily the right move, even though we think that maybe they could go a little bit longer.”
The Democrats and Republicans have remained locked in an impasse over raising the US’ $31.4 trillion debt ceiling — which means the US could run out of money as early as June 1, Treasury Secretary Janet Yellen has warned.
She reiterated the deadline on NBC’s “Meet the Press” show on Sunday.
“I indicated in my last letter to Congress that we expect to be unable to pay all of our bills in early June and possibly as soon as June 1. And I will continue to update Congress, but I certainly haven’t changed my assessment. So I think that’s a hard deadline,” she told NBC.
The US government is expecting some tax payments on June 15 that are “substantial” which would provide some revenue, but there’s uncertainty surrounding the situation, she added to NBC.
“There’s always uncertainty about tax receipts and spending, and so it’s hard to be absolutely certain about this, but my assessment is that the odds of reaching June 15 while being able to pay all of our bills are quite low,” Yellen said.
Insider’s Filip De Mott reported on Saturday that the Treasury General Account balance fell to $57.3 billion on Thursday, the lowest since December 2021. That’s about a fifth of the federal government’s $316 billion cash balance at the end of April.
The federal government relies on debt — raised from selling bonds — for its spending. US debt serves as a key benchmark for different types of credit, and hence, a default could have a domino effect on the domestic and global economy.
Rohit Chopra, the director of the Consumer Financial Protection Bureau, told CNN on May 11 that “every family should be concerned” about the debt ceiling as borrowing costs on credit cards, car loans, and mortgages could spike if the US defaults on its debt.
Phillips did not immediately respond to Insider’s response for comment sent outside regular business hours.