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The Debt Ceiling Debate

May 16, 2023 - 2 MINUTE READ

We all hear the news from all the major media outlets, will the debt ceiling get raised before the deadline? This is not new news; it seems like every year there is another showdown in the U.S. over raising the debt limit. 1 Here is a fun fact you might find interesting; the debt ceiling has been raised over 100 times since World War II. What has changed is the media coverage and the politics behind the issue from both sides.

 

1An important point to remember is raising the debt ceiling allows the U.S. treasury to borrow to pay existing obligations. The debate conversation is the same, it’s the players in the game and the balance of power in the U.S. government that changes. While no one can predict the future, most economists do not see either side wanting to be responsible for not getting another deal done.

 

So what does this mean for investors? We may see short-term volatility the longer the debate goes on but be mindful of what the media does and how it makes money. Not getting a deal done benefits no one and the effects would be negative for all parties involved. In typical government fashion, we most likely will see a deal get done in the 11th hour.

Sources:

1https://www.fidelity.com/learning-center/trading-investing/debt-ceiling

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