President Obama met bank executives including Goldman Sachs chief Lloyd Blankfein on Wednesday as economists, business leaders and European officials warned that the US government shutdown threatens to plunge the economy into a “deep and dark recession”.

The meeting with finance chiefs came as the shutdown entered its second day and Obama prepared to meet with Republican leaders in the hope of ending the impasse. Business leaders expressed concern about the shutdown, and about a looming battle over the nation’s $16.7tn debt ceiling.

Treasury secretary Jack Lew has warned that the US could default on its debts if the limit is not raised soon.

“There’s precedent for a government shutdown; there is no precedent for a default,” Blankfein told reporters after the meeting. He warned that the economic recovery was already “shallow”.

Earlier on Wednesday, the European central bank president Mario Draghi warned that a protracted US shutdown could impede economic recoveries around the world. “If it were to be protected, it is certainly a risk to the US and the world recovery, so we need to have it present in our minds,” he said.

Business Roundtable president John Engler said the shutdown and deficit row were already harming the economy. “America’s business leaders are extremely disappointed by the failure of the nation’s political leaders to reach an agreement on funding the basic operations of the federal government,” he said. see more

source: The Guardian