The White House alerted that if the US fails, shares will drop 45% and severe downturn will start in the third quarter

The White House’s Council of Economic Advisers issued a warning earlier this month that a US debt default might cause a stock market decline of 45% and lead to a severe recession similar to the Great Financial Crisis of 2008.

Earlier in June, when Treasury Secretary Janet Yellen used all of the department’s exceptional initiatives, the last day for lawmakers to raise the debt ceiling is drawing near. It’s possible that the Treasury won’t be able to provide for Social Security benefits, Medicare and Medicaid, and finally payouts to holders of US bonds if a debt ceiling agreement isn’t achieved.

The US 1-month Treasury yield has increased from a recent level of 3.31% to 5.56% as a result of probable debt default in mid-June.