One-in-four chance US will hit debt ceiling X-date

One-in-four chance US will hit debt ceiling X-date
The odds of passing the X-date without an increase in the debt is around 25% and rising, according to JPMorgan.
MAY 24, 2023
By  Bloomberg

There’s a roughly one-in-four chance that the United States will hit the so-called X-date — at which the U.S. government runs out of cash — without a deal to raise the debt limit, and the odds are getting worse, according to JPMorgan Chase & Co.

“We still think the most likely outcome is a deal signed into law before the X-date, though we see the odds of passing that date without an increase in the ceiling at around 25% and rising,” JPMorgan chief U.S. economist Michael Feroli said Wednesday in a note to clients.

“In this latter scenario, we think there is a very high likelihood Treasury would prioritize principal and interest payments,” he wrote. “While doing so would avoid a technical default, there would still be several adverse effects, including a likely downgrade of the U.S. credit rating.”

A potential deal including cuts to federal government spending could reduce U.S. gross domestic product by 0.1% to 0.5% in 2024, depending on the details, JPMorgan's Feroli said.

According to a popular economic model for monetary policy known as the Taylor rule, that would suggest the Federal Reserve needs to make one fewer quarter-point interest-rate hike in order to bring inflation down, he said.

What will drive gold prices higher in the second half of 2023?

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.