The debt limit was reinstated at $36tn on January 2, but it’s not a hard deadline for Congress to act upon immediately. Therefore, the reinstatement of the debt limit does not have implications for our near-term forecast.
Congress
Following the outcome of the US elections, we have adopted our ‘limited Trump’ scenario as our new baseline forecast. Our new baseline assumes a Republican-led Congress extends the personal tax cuts under the 2017 tax law and enacts higher spending levels.
Though Vice President Kamala Harris’ chances of winning the election have improved since her debate with former President Donald Trump, we aren’t changing our subjective odds for the outcome of the 2024 presidential contest.
The economy remains in transition and is settling into a more sustainable pace of growth, with next year being decent but unspectacular. In our view, the probability of a recession in the next 12 months is low, but not zero.
The outcome of the presidential and congressional elections this November will be pivotal for the outlook in 2025 and beyond. This week, join Bernard Yaros, Lead Economist, as he examines the impact of a potential Democratic sweep of the White House and Congress.
Ecuador is no longer on track towards meeting the criteria imposed on it by the IMF to keep its US$6.4bn Extended Fund Facility (EFF) program afloat. President Guillermo Lasso has temporarily abandoned the fuel subsidy reform in the face of opposition from Congress and growing social unrest, undermining fiscal consolidation.
