As of January 1, 2025, the U.S. Congress is in violation of the federal debt limit, which has revived concerns about governmental spending and debt management.
The reinstatement of the debt ceiling means Congress cannot issue new debt; however, the president can invoke 'extraordinary measures' to temporarily manage the situation.
Economists fear that as the debt ceiling deadline approaches, the bond market may react negatively, leading to higher interest rates and a deeper debt crisis.
Despite alarming predictions, a debt default is extremely unlikely, and government bonds will still be paid on time, alleviating some concerns.
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