Stocks to plunge 45%?

5.23.23 - Stocks to plunge 45%?

Gold last traded at $1,975 an ounce. Silver at $23.45 an ounce.

The White House has warned stocks will plunge 45% and a deep recession will strike in the 3rd quarter if the US defaults -Yahoo! Finance

A US debt default could spark a 45% crash in the stock market and generate a deep recession akin to the 2008 Great Financial Crisis, the White House's Council of Economic Advisers warned earlier this month.

The deadline for lawmakers to lift the debt limit is rapidly approaching in early June as Treasury Secretary Janet Yellen exhausts all of the department's extraordinary measures. If a debt ceiling deal isn't reached, it could mean the Treasury forgoes Social Security payments, payments to Medicare and Medicaid, and ultimately payments to US bond holders.

A potential debt default in mid-June has led to a surge in the US 1-month Treasury yield to 5.56% from its low of 3.31% last month.

"The closer the US gets to the debt ceiling, the more we expect these market-stress indicators to worsen, leading to increased volatility in equity and corporate bond markets and inhibiting firms' ability to finance themselves and engage in the productive investment that is essential for extending the current [economic] expansion," The White House CEA said in a May 3 post.