What Investors Need to Know About the U.S. Debt Ceiling

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Congress has taken action to raise the debt limit, temporarily suspend it, or revise how it is defined on 78 occasions since 1960.1 Given the potential consequences, failing to raise the debt ceiling should not be an option. However, this year, the process of reaching a resolution could roil the markets, akin to 2011, when brinkmanship around the debt ceiling contributed to one agency’s decision to downgrade the United States’ sovereign credit rating. Let’s explore why this year’s debt ceiling debate could be especially contentious and examine the possible implications for investors.