"If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history"
- Jacob Lew, Treasury Secretary
The world's largest economy is rapidly approaching its default as according to latest projection, the United States will run out of funds to pay its bill until October 17. While Democrats and Republicans are struggling to make any progress in their hot debates, the only way to avoid the default is to raise the $16.7 trillion debt limit. Treasury Secretary Jacob Lew's comments are marking the first time authorities are giving a clear date for when the government would hit its debt ceiling. Meanwhile, economists expected it happen to sometime from mid-October to early November. In order to keep the country under the debt limit the Treasury has been undertaking extraordinary measures, including delaying pension fund payments since May.
Even though the economy is heading to a default, it is sending mixed signals over its strength, as demand for capital goods increased in August, albeit less than expected, while demand for newly-built homes increased amid rising mortgage rates. The Commerce Department said booking for core durable goods advanced 1.5% after July's 3.3% drop, while short of analysts' expectations of a 2% gain. Moreover, orders for all long-lasting goods inched higher 0.1%, after sinking 8.1% a month earlier. The same department said demand for new single-family houses soared 7.9% in August, bringing the overall number to 421,000 units.
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