Janet Yellen says U.S. faces recession if Congress doesn’t act

Treasury Secretary Janet Yellen on Tuesday said she believes the economy would fall into a recession if Congress fails to address the borrowing limit before an unprecedented default on the U.S. debt.

“I do regard Oct. 18 as a deadline. It would be catastrophic to not pay the government’s bills, for us to be in a position where we lacked the resources to pay the government’s bills,” Yellen said during a “Squawk Box” interview.

President Joe Biden on Monday called on Congress to raise the debt limit this week and avoid even approaching near-certain economic turmoil. He blamed Republicans and Senate Minority Leader Mitch McConnell, R-Ky., for standing in the way of legislation that would lift the borrowing cap through a filibuster.

“I fully expect it would cause a recession as well,” Yellen added Tuesday.

The Treasury secretary has for weeks warned House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Chuck Schumer, D-N.Y., that the U.S. will no longer be able to honor its debts around Oct. 18. Lawmakers must raise or suspend the debt ceiling before that date or risk the first-ever U.S. default.

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