In case you haven't heard, Congress is under pressure to raise the national debt ceiling before Oct. 18th to prevent the U.S. government from running out of money to pay its bills. If Congress fails to suspend or raise the debt limit before the deadline, lawmakers risk a default that could cost millions of jobs, jeopardize government benefits and crash the financial markets.

Congress has raised or suspended the ceiling 78 times since 1960, according to the U.S. Treasury Department. In fact, the 2011 dispute over the debt limit and budget deficits contributed to Standard & Poor’s decreasing the U.S. credit rating for the first time ever. Some economic experts warn that a debt default could cause another economic recession which includes millions of job losses that had been recovered since the COVID-19 outbreak last year.

“Given where we are in the economic recovery and since we’re not completely out of the woods with COVID and supply chain issues, I think the government will avoid at all costs creating a political nightmare that would put more pressure on the economic recovery,” said Liz Young, head of investment strategist at SoFi, an online personal finance company.

An unresolved debt limit could also mean a spike in mortgage rates and other consumer borrowing for Americans. “Like many of these crises in Washington over the past several years, calmer heads will likely prevail at the last minute,” according to Michael Sheldon, chief investment advisor for RDM Financial Group at Hightower. “For investors thinking long term who are putting away money for retirement, this will probably be short-lived, so you want to continue to focus on your long-term investment objectives.”

Regardless of what the lawmakers decide by the October 18th deadline, there's no denying that the market will likely be affected by the debt ceiling standoff. Hopefully, for the best. 

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