What debt default would mean for the nation's credit rating

Transcript

EMILY PECK: Good morning! Welcome to Axios Today! It’s Friday, May 26th. I’m Emily Peck in for Niala Boodhoo. Here’s what you need to know today: How working mothers in the U.S. defied expectations. Plus, the not-so-sweet news about artificial sweeteners. But first, if the U.S. defaults on its debts, what happens to its reputation? That’s today’s One Big Thing.

What a debt default could mean for the country' credit rating...and reputation

EMILY: You may be tired of hearing about it, but we are edging ever closer to June 1st. That's the so-called “X-date” when Treasury Secretary Janet Yellen warns that the U.S. will run out of money to pay its bills and there's still no clear resolution in sight. Yet, as my Axios Markets co-author Matt Phillips has been reporting, markets still don't seem that worried. But what does the risk of a default mean for the U.S. government's reputation? Matt is here with the big picture. Hey Matt.

MATT PHILLIPS: Hey Emily.

EMILY: So Matt, it feels like the debt ceiling hype is pretty intense right now. Lots of doomsday warnings are circulating. Should we be worried?

MATT: Well, maybe? But the markets don't seem that worried. Stocks are kind of puttering along, like we're still up about 7% for the year and there are some little idiosyncratic weirdnesses in the bond market like, for instance, people are avoiding some of the treasury bills that look like they could be a problem. But besides that, it's not like the financial markets are in any kind of freak out mode at all.

EMILY: I've been hearing that the credit rating agencies, they're may be worried. What's happening there?

MATT: For those that don’t follow that this closely, there's these companies, their whole job is to take a look at borrowers, whether they're like corporate borrowers or even like entire countries, and say like, you are good at paying back your debts, you know, you're not so good, and they give you a rating, kind of like your personal credit rating. So anyway, these companies – and there's three big ones – Fitch, S&P and Moody's. Fitch came out on Wednesday and basically threatened to take away the AAA gold standard style rating we have right now. If the debt ceiling doesn't get resolved in a somewhat orderly manner before we hit this X date.

So, yeah, they're saying it's not gonna be good for our reputation. We had a similar debt ceiling fight between Republicans that held the House under then Speaker John Boehner and the White House, the Obama administration, ah the summer of 2011. It went down to the wire and we got a deal. But even after we got a deal, S&P came out and said, well, this is no way to run a country, and like basically took away our AAA credit rating.

EMILY: Okay. So Matt, even if the credit rating agencies don't downgrade the U.S. and we come to a deal, crisis averted, surely incidents like this can't be good for the country's reputation, right?

MATT: Yeah, I think that's true. Like the U.S. has benefited because we have been seen for decades as the safest possible entity to which you could loan money, basically, and be assured that the U.S. government is gonna pay you back principle and interest on time. And this definitely has changed that, you know, in very specific circumstances like you can see it in some of the prices for the short term treasury bills. The question is, like, there's no other entity that will fulfill that role in the world, like there’s nowhere else. So, while our reputation might take something of a hit, you know, it's still tough to find something better.

EMILY: June 1st is fast approaching. There might not be a resolution. The U.S. might, I guess, run out of money. What are you going to be watching for?

MATT: What everyone will be watching, you know, both on and off Wall Street, is the Treasury General account. It's a public number. It's the U.S. Government's Bank account number, and you can see where it is every day. If it gets below $30 billion, that's putting us kind of uncomfortably close to where we might not have enough cash in there to pay obligations that come up. So that's kind of the number everybody's gonna be watching, but nobody knows exactly how fast the money will go.

EMILY: Matt Phillips is a markets correspondent for Axios, and he co-writes the Axios Market's newsletter with me. Thanks, Matt.

MATT: Thank you.

EMILY: In a moment, the return of working moms defies pandemic expectations.

How working mothers in the U.S. defied expectations

EMILY: Welcome back to Axios Today. I'm Emily Peck. The pandemic was supposed to be doomsday for women, especially working mothers. Dire headlines predicted they'd flee the workforce and never return, or really struggle to come back. And, as it turns out, that's not what happened, as I reported for Axios this week.

The number of working mothers in the labor force is at a level last seen in 2019 – a peak back when women's employment was surging. How'd that happen? Well, first, there was a strong labor market and that meant employers were really eager to hire people. Second, a lot of women never had to leave the workforce because of remote work. It was a total game changer for working parents, especially women. If you'll notice, most, if not all, of the CEOs who are now arguing for people to come back to the office are older men who don't really have to worry about juggling work and family at all.

So, though not everyone can take advantage of remote work, experts argue that this shift, the shift to working from home is a much needed feminist update to old-fashioned conceptions about how office work is organized.

All in all, in markets land, we'd call what happened with women over the past few years a “surprise to the upside.”

We'll link to more of my reporting on this in the show notes.

The not-so-sweet news about artificial sweeteners

EMILY: There's new guidance on artificial sweeteners from the World Health Organization. So before you choose between Stevia, Splenda, sugar, we wanted to check in with Axios Lifestyle reporter Carly Mallenbaum. Hey, Carly.

CARLY MALLENBAUM: Hey Emily, how's it going?

EMILY: I think a lot of people assume sugar substitutes are at least a better choice than sugar. How popular are they?

CARLY: They're really popular. I mean, we see Nielsen data that's tracked that people buy more sugar substitutes now than they do some caloric sweeteners these days, or at least in the last 10 years. And the mindset tends to be what you're saying, oh, it's not real sugar, it's artificial, it doesn't really count, or that's fine to have more of that, and that's when it becomes a problem.

EMILY: The WHO did a review of studies about sugar substitutes, right? And now they have some new recommendations. What are they?

CARLY: Their new recommendation is don't just have a lot of sugar substitutes and think it's fine to replace sugar with that. In fact, if you're someone who's looking to Stevia or Sweet’N Low or sweeteners like that because you think it's a good way to lose weight, they're like, please don't do that. In fact, they say try not to have sweeteners in your diet altogether. Try to lessen that overall. But I realize in practice that's not always the most helpful advice.

EMILY: Are these recommendations ok for everyone? Aren't there certain cohorts that it's okay or even recommended to use sugar substitutes?

CARLY: The World Health Organization said these recommendations are for everyone, except they weren't talking to people who already have diabetes.

EMILY: So artificial sweeteners and sugar substitutes aren't gonna help you lose weight, and I think WHO has found they're also not good for your health. Why is that?

CARLY: Well, at least they're just saying we are concerned about long-term risks. We have all these studies. We've found that it could increase your risk of heart disease. We've found that it could change the makeup of your gut microbiome in a way that hurts your metabolic health. Hopefully that will help people who were just thinking, like, I'm healthy, I'm having stevia. They'll make them pause and think, okay, it's not just about the number of calories I'm taking. This could have some other implications on my health.

EMILY: That's Axios’ Carly Mallenbaum. Thanks. Carly.

CARLY: Thank you.

Customize your Ketchup

EMILY: Since we’re already talkin’ food, here’s one more fun thing before we go…you know those giant soda dispensers you see at the movies or fast food places, the ones that let you mix and match flavors? Well, Heinz just unveiled something similar, but for ketchup.

It’s a new digital sauce dispensing machine capable of serving over 200 variations of ketchup. Flavors include mango or chipotle, or Heinz inventions like Kranch (that’s ketchup/ranch) or Tarchup (ketchup tartar sauce)…I’m not making those up. They won’t be available for this year’s Memorial Day BBQ’s, but you may get to see them by the end of the year. And, until then, you can mix up your own sauces – if that’s your thing.

EMILY: That’s all for this week. Axios Today is produced by Fonda Mwangi, Lydia McMullen-Laird and Robin Linn. Our senior sound engineer is Alex Sugiura [[soo-gee-ARE-uh]]. Alexandra Botti is our supervising producer. Aja Whitaker-Moore is Axios’ executive editor, and Sara Kehaulani Goo is Axios’ editor in chief.

And I’m Emily Peck. We’re off Monday for Memorial Day, but we’re back with you Tuesday…so stay safe, enjoy your ketchup, and enjoy your holiday weekend.