Treasury Secretary Janet Yellen has warned of "economic and financial catastrophe" if the debt ceiling is not lifted or suspended by June 1. Congressman Patrick McHenry of North Carolina, Chairman of the House Financial Services Committee, is working to come up with a solution to the debt ceiling issue, noting that a "protracted" default could trigger a Great Recession type of scenario. Both are urging Congress and the White House to come to an agreement before the June 1 deadline in order to avoid economic disaster.
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The US is facing an unprecedented default as it reaches its legal borrowing limit, leading to a standoff between Congress and the White House. The recent influx of cash to the IRS has allowed it to process new and backlogged tax returns, giving policymakers a more precise picture of when the Treasury could run out of money. Republicans have proposed extending the deadline, though the White House has not made any commitments.
Intuit, the parent company of TurboTax, has agreed to pay $141 million to settle a multistate lawsuit over deceptive advertising practices. Consumers who were eligible for the IRS Free File program but were instead charged a fee to file their tax returns with TurboTax will receive restitution and relief as part of the settlement. Intuit must also suspend its "free, free, free" ad campaign and pay $11 million to the states that participated in the lawsuit.
Adidas has suffered a 400 million euro ($441 million) loss in sales due to its breakup with rapper Ye and his Yeezy shoe brand. CEO Bjorn Gulden said the company is “getting closer and closer to making a decision” on what to do with the 1.2 billion euros ($1.3 billion) worth of unsold Yeezy shoes, and that the “options are narrowing.” He added that Adidas is “working hard to make sure that we can come up with a solution that is beneficial for all parties involved.”
The U.S. job market remains strong according to the Labor Department's latest report, with the unemployment rate falling to 3.4%, tying for the lowest level since 1969. Nonfarm payrolls increased by 253,000, beating Wall Street estimates, and the more encompassing number that includes discouraged workers and those holding part-time jobs for economic reasons edged lower to 6.6%. This indicates that the job market is still strong despite the economic slowdown.
Avril Haines, the U.S. Director of National Intelligence, has warned that a domestic debt default could lead to global uncertainty, and that Russia and China would likely take advantage of the situation to portray the U.S. as a chaotic and unstable nation. She also noted that the Russian military is facing significant shortfalls and would be unable to sustain its current operations without a mandatory mobilization and third-party ammunition supplies.
The U.S. is facing a potential default on its debt for the first time in history, with economists warning of dire consequences. Small business owners are particularly vulnerable, and President Biden is set to meet with congressional leaders to try and reach a deal to prevent a default. It is hoped that this meeting will result in an agreement that will prevent the U.S. from defaulting on its debt.
Key takeaways: The White House Council of Economic Advisers (CEA) identified three potential scenarios of varying severity that could result from the current debt ceiling…