Debt-Ceiling Standoff Could Start a Recession, but Default Would Be Worse

Economists assess the damage that could occur in three scenarios ranging from a last-minute deal to lengthy impasse

Prolonged debt-ceiling squabbling could push the U.S. economy into recession, while a government default on its obligations might touch off a severe financial crisis.

U.S. lawmakers are negotiating over raising the federal government’s borrowing limit and may have just days to act before the standoff reverberates through the economy.