March 29
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Treasury Secretary Janet Yellen is "nervous" about a U.S. default on its debt, and has warned that Americans are likely to face a terrible and worsening recession if Congress does not raise the debt ceiling this summer, Axios reports.

Yellen's gloomy fiscal outlook is part of the Biden administration's attempt to put political pressure on the new Republican majority in the House to raise the national debt ceiling without delay or hesitation.

"Of course, it makes me nervous," Yellen told Axios from Johannesburg, South Africa, at the end of a 10-day trip across the continent. “It would be devastating. It's a catastrophe.”

She noted, fear could break free, making consumers too afraid to spend, a scenario that Yellen called the psychological consequences.

The threat of debt default overshadowed Yellen's trip to Africa, where during her first stop in Dakar she rejected Republicans' proposal to prioritize debt repayment.

Yellen's trip was intended to convince Africans that the U.S. was committed to a long-term relationship on everything from food security to rural electrification. But the possibility of a U.S. default was a reminder to African hosts of U.S. disagreements at home. Promises made by one political party do not guarantee the fulfillment of another.

Like the war in Ukraine, a full U.S. default would have ripple effects around the world, making it more expensive to borrow money in some of the world's poorest countries.

“Americans would face higher borrowing costs, and it would cause a good deal of turmoil globally as well," Yellen said.

Yellen doesn't seem keen to spend her nights negotiating the debt ceiling with new House Speaker Kevin McCarthy. She is careful to say that any formal negotiations will take place between the White House and Congress. 

"The president and the leadership of Congress are responsible to find a way to get the debt ceiling raised,” she said.

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