The United States faces three major economic deadlines before the end of the year, which is expected to affect the trend of the U.S. index

On October 5, market analyst Jacob Pramuk wrote that the US Congress faces several dangerous deadlines that may have an impact on the United States in the next few years. Members of Congress must first try to raise the debt ceiling around October 18 to avoid the threat of US debt default. The Democrats also plan to pass President Biden’s two economic agendas before October 31. Then, lawmakers must approve an appropriation bill before December 3 to prevent the government from shutting down.

Three deadlines that the U.S. Congress needs to pay attention to

① Raise the debt ceiling before October 18

If Congress fails to resolve the debt ceiling issue, it may disrupt financial markets, increase borrowing costs, and increase the risk of the United States’ first default. The worst-case scenario could cost the US employment opportunities and harm the global economy.

Although Yellen’s deadline for congressional leaders is estimated to be October 18, she pointed out that the Treasury Department may not be able to pay the bills before or after this date. It is not clear how lawmakers will resolve this crisis.

Failure to raise the debt ceiling will not only close the door to future expenditures, but will also prevent the United States from repaying its current debt. Democrats pointed out that since the last suspension of the debt ceiling in 2019, Republicans have worked with them to approve trillions of dollars in emergency epidemic assistance.

Democrats may have to raise the ceiling through budget coordination, a process that allows them to pass legislation without Republicans voting in the Senate. The Democrats may be able to do this in a bill separate from the current budget plan that will invest in social safety nets and green energy.

The Democrats hope that as the October 18 deadline approaches, Republicans will give in, but the Republican leaders have not indicated that they will change their positions.

② Biden's economic plan must be approved before October 31

The Democratic Party set October 31 as the deadline for passing two items on the Biden economic agenda. By this deadline, if Congress does not approve the infrastructure bill, funding for some ground transportation projects will lapse at the end of this month. If Congress passes the infrastructure bill, these funds will be used again within five years.

Democratic leaders have admitted that they need the two parties to approve the plan, as well as their broader budget proposal, to pass both plans at the same time. This means that the House of Representatives approves the infrastructure bill passed by the Senate before the October 31 deadline, which is also the deadline for the Senate and House to approve Biden's larger agenda.

Biden and congressional leaders more clearly linked these two plans. Earlier, progressives in the House of Representatives stated that they would not vote for the infrastructure bill until the social spending bill is passed by the Senate. The Democratic Party needs to reach an agreement in the next few days and write final legislation to meet the deadline.

③Approve an appropriation bill before December 3 to prevent the government from shutting down

The United States has narrowly avoided the government closing before the final date at the end of September. The parliamentarians did not give themselves too much time and had to take action again to prevent the government from shutting down.

Biden signed a bill last week to fund the government until December 3. Congress will have about two months to approve and pass a long-term appropriations bill. It is not inevitable to complete a financing plan on time. As Democrats take action to raise or suspend the debt ceiling and pass Biden's two economic plans, there will be a lot of work to be done in the coming weeks. As the debt ceiling process has shown, the approach of the 2022 midterm elections also increases Congress’ motivation for political struggles over issues that are usually unremarkable.

If the United States can raise the debt ceiling and related agreements before the deadline, it will be good for the dollar index, but it will be negative. Investors need to keep an eye on relevant news in the future.



Daily chart of the dollar index

GMT+8 At 15:00 on October 6, the US dollar index was at 94.15.