RE:The US Budget Deal - Some Thoughts The debt ceiling resolution is just confirmation that things are about to get uglier in the near term. Let me explain what's going on now.
Debt ceiling gets increased. They now have sufficient money in their checking/savings account to handle any money outflows for the next year or so. Money gets pulled out of the real economy in the near term. However, overtime money gets deposited back into bank accounts through government spending. The net result is that liquidity gets removed from the economy which further slows things down.
There are 2 forces working simultaneously:
1) quantitative tightening - the Fed is allowing older maturities to simply roll off its balance sheet.
2) debt ceiling being raised - money is being pulled out of the economy to finance the debt through private households/pension funds/commercial banks,etc.
less liquidity is disinflationary which reduces real gdp in the economy in the short run.