A U.S. Debt Default Will Impact Your Finances and Investments – Here’s How

Were the U.S. to default on its debt it would cause severe hardship to American families, harm our global leadership position, raise questions about our ability to defend our national security interests and, importantly, negatively affect your wallet whether you are a welfare recipient, stock or bond investor, home owner or currently employed.

By Lorimer Wilson, Managing Editor of munKNEE.com – Tour KEY to making money!

1. A debt default:
   • could delay payments for programs like Social Security, Medicare, Medicaid, SNAP, and others, in full or in part, affecting:
     • the more than 70 million disabled or retired Americans who rely on timely monthly Social Security checks, and
     • the more than 40 million people who receive government food assistance.
2. According to Moody’s Analytics, a debt default:
   • could cause the unemployment rate to increase to 5% were the U.S. government to breach the debt limit by only a few days and
   • could cause the unemployment rate to jump to 8% were the breach to drag on for several weeks.
3. According to Mark Zandi, Moody’s chief economist, a debt default:
   • would spike interest rates further and it
   • would likely spark a recession.
4. According to Jeff Tucker, a Zillow senior economist, a debt default:
   • would cause home sales to plummet,
   • would cause mortgage rates to climb to as high as 8.4%, and it
   • would cause mortgage bills to soar by over 20%.
5. According to Jonas Goltermann, a markets economist at Capital Economics, a debt default:
   • would cause stock prices to plummet by 20%, on average, under a prolonged default scenario, and,
   • could cause the markets to fall sharply even if the U.S. doesn’t default but lawmakers delay acting up to the last moment.
6. Any default:
   • would undermine U.S. Treasuries as an ultra-safe asset causing prices to plummet and demand to crater.

Make no mistake about it, a debt default by the government would adversely affect you one way or another.