Speaker of the House Kevin McCarthy, R-Calif., talks to reporters about the debt limit negotiations as he arrives at the Capitol in Washington, Friday, May 26, 2023. (AP)

Punchbowl News reported on Friday that US House Speaker Kevin McCarthy reportedly said that progress was made in yesterday's talks over the negotiations on raising the debt limit.

"I thought we made progress yesterday," McCarthy was quoted as saying.

We can't get those 97 days back that President Biden wasted by refusing to negotiate. But I'm not just fighting for an agreement—I'm fighting for transformational reform that's worthy of the American people. pic.twitter.com/k2SauFleeZ
— Kevin McCarthy (@SpeakerMcCarthy) May 26, 2023

This comes a day after US sources reported that Biden and McCarthy are nearing a deal to raise the debt ceiling for two years in exchange for certain cuts in federal spending.

The debate over raising the debt ceiling has become an annual occurrence, however, this year Congress is in a race against time while Republicans and Democrats are yet to agree on the terms.

On Wednesday, US Treasury Secretary Janet Yellen warned that failure to reach a borrowing ceiling consensus before the June deadline would result in severe economic changes.

US markets are accumulating losses every day as the debt default date of June 1st, also known as X-date, closes in. But the default impact would not be limited to the US as it would spill over to the global market.

Moreover, in case this scenario happens, investors would lose trust in the US financial system, and thus won't be as motivated to invest in products and instruments backed by the US dollar.

Spending on federal programs, such as social securities, medical assistance, and benefits programs for serving and retired army personnel, among other payments, that accounted for 45 percent of last year's 6.27 trillion budget, would be forced to a halt - affecting tens of millions of Americans.

"We would simply not have enough cash to meet all of our obligations," Yellen said earlier this month.