Policy: Budgets & Deficits

Fiscal crisis economic dashboard: More fear creeping into markets

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Debt Ceiling,PennAve,Joseph Lawler,Economy,Budgets and Deficits,Jack Lew,Minusextra,Government Shutdown,Financial Markets

To monitor the state of the economy as Washington's fiscal crisis worsens, the Washington Examiner has assembled an economic dashboard.

These are the key indicators to follow in the days ahead, as the government shutdown drags on and the deadline to raise the debt ceiling or face a government default approaches.

The first is interest rates on short-term Treasury bonds. These are beginning to rise quickly, reflecting some fears creeping into the markets about the possibility that Congress doesn't raise the debt ceiling in time and the Treasury fails to make a payment on an obligation. The rate on the one-month bill, in particular, has spiked in recent days:


The U.S. dollar continues to slide against a basket of currency, another sign of increasing worries about the debt ceiling:


Stocks have been trending down, but aren't yet showing any signs of panic over the shutdown or the fallout from a prolonged debt ceiling fight. Here's the S&P 500:


Consumer confidence has begun to crater, according to Gallup's daily measure:


General economic policy uncertainty is also steadily rising. The Baker-Bloom-Davisindex, a publicly published measure of uncertainty over policy, is going up:


And the cost of insuring U.S. sovereign debt against default is spiking. Spreads on five-year credit default swaps for U.S. Treasuries have risen to 42 basis points as of Thursday, meaning that it would cost $42,000 a year to insure $10 million of U.S. bonds against default, per MarketWatch:


There is no resolution to the shutdown in sight, and Oct. 17 — when Treasury Secretary Jack Lew has said he will exhaust his resources for creating headroom under the debt ceiling — is still two weeks away. Expect these conditions to deteriorate as the deadline approaches.

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