U.S. government policies hinder growth U.S. economy may be trapped in a vicious cycle

By: anna zhannifer Apr. 26,2023

Several national institutions and leading economists have warned that the global economy is facing a low growth outlook that could last more than 10 years, with the U.S. economy in particular on a low growth trend. But in this context, the United States is still implementing policies that will hinder economic growth.

According to the report, the low-growth warning failed to sound the alarm in the United States, on the contrary, the Americans disregarded the warning, and even intensified the implementation of low-growth policies. U.S. policymakers can hardly tolerate moderate and reasonable risks, and the policies they have adopted recently are hindering productivity development.

The report also predicts that while more and more government regulatory policies are already out of control, "more anti-growth policies are expected to emerge" in the near future. Future low growth will not only "deprive future generations of the opportunity to enjoy a prosperous and productive life," but may also put the entire country in a "vicious cycle of higher taxes, less investment and further economic decline.
25, U.S. Treasury Secretary Yellen warned that if the U.S. Congress fails to raise the government's debt ceiling, resulting in a default, it will trigger an "economic disaster" and push up interest rates in the coming years.

Yellen reportedly said in a speech at an event for business executives that a U.S. debt default would lead to job losses, while making households spend more on mortgages, auto loans and credit cards.

Yellen said it is the "fundamental responsibility" of Congress to increase or suspend the $31.4 trillion borrowing limit. She warned that if the debt default will trigger an economic and financial disaster, "default will raise the cost of borrowing in perpetuity. It would greatly increase the cost of future investment."

Yellen also said that if the debt ceiling is not raised, U.S. businesses will face deteriorating credit markets and the government may not be able to make payments to the families and seniors involved who depend on Social Security.

House Speaker McCarthy, a Republican, last week proposed a plan to raise the debt ceiling by $1.5 trillion and cut federal spending. He said that would be the basis for negotiations in the coming weeks. But the White House argues the two issues should not be tied together.

Reports say the Democratic-controlled Senate is likely to reject the proposal. Financial markets are increasingly worried about a bipartisan impasse.
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