Shutdowns of the federal government usually do not give up too much economic loss. But what started on Wednesday seems risky, not at least because the President Donald Trump Threatening to use deadlock to permanently eliminate thousands of government jobs and the economy situation is already uncertain.
For now, financial markets are only removing deadlock as the latest failure Republican And Democrat To agree on a budget and keep the government operational.
Independent economist Ed Yardeni wrote in a comment on Thursday, “Everyone seems quite decent about the shutdown, assuming that democrats and Republican will come on terms and life will move forward, as in the previous shutdown.” “History can certainly repeat, especially with a man who is known for sitting in the oval office.”
But looking at Chase, separating the two political parties, Yardni said, “Lack of caution is somewhat surprising.”
The US government has now closed 21 times in the last half century. The last of those shutdowns was the longest for five weeks in December 2019 during Trump’s first term.
Even one barely left an impression on the world’s largest economy: Congress’s budget office estimates that it was only 0.02% shaved in the production of the country 2019 US GDP – goods and services.
The economic effect of shutdown is usually fleeting. Federal activists are bothered and the federal government delays spending something while they finally. When they are finished, the federal workers go back to their jobs and collect the payment back, and the government spent the money he withdrew. It is too much wash.
“The government’s shutdowns are uncomfortable and messy,” said Scott Helfstein, the head of the investment strategy in the investment firm Global X. “But there is very little evidence that they have a significant impact on the economy. Usually, the lost economic activity, if the first place is meaningful, is recovered in the following quarter.
Government profit payments that provide significant income support for millions of Americans, such as social security, and health care programs such as Medicare, will not be interrupted by shutdown.
data According to CBO director Philip Swagel, the previous shutdown has shown very little impact on the US GDP, until they are expanded. “The effect is not immediate, but over time, a shutdown has a negative effect on the economy,” he recently explained the Associated Press.
Damage can be worse than this cow-around.
First, some government agencies dodged the shutdown of 2018-2019 as they had already received money and could continue to operate. This time it has not happened: CBO estimates that about 750,000 federal employees can be temporarily closed.
Trump is also considering some more destructive: his budget office this time has threatened the collective firing of federal workers, not temporary furls.
A “decrease in force” will not only shut down the employees, but will also eliminate their positions, threatening more upheaval for a task force that has already been purified by Trump. ” We are closing many people who are going to be very impressed, and they are democrats. They are going to become a Democrat, “the President said on Tuesday.
Thomas Ryan of Capital Economics wrote in a comment that “it is advisable to assume that (the risk of trump’s month’s sorting) is a political bang, which aims to pressurize the Democrats to approve funding extensions without concession.” But, he said, “If it is followed through it, it can result in prolonged results, to reduce the government for a long time and keep the area as a pulling on parole in the next year.”
Ryan Sweet, the chief American economist at Oxford Economics, estimates that the shutdown and temporary loss for federal workers can shave 0.1 to 0.2 percentage points from the country’s annual growth rate in the fourth quarter for each week. Some will be recovered once again after opening.
“The economic cost of the government’s shutdown is usually the least until they live for several weeks,” Sweet wrote.
This shutdown also comes at a time when the job market is already under stress, has been damaged by the impact of high interest rates and around the uncertainty around Trump’s uncertainty, from almost every country on the Earth on imports from almost every country and on specific products – from copper to foreign films.
Earlier this month, the amendment of the Labor Department showed that the economy originally created 911,000 less jobs compared to the year ending in March. This meant that employers added less than 71,000 new jobs in a month during that period, not 147,000 reported earlier. Since March, employment generation has become even more slow – an average of 53,000 per month. While hiring the boom during 2021–2023, which follows the Kovid -19 lockdown, on the contrary, the economy was creating 400,000 jobs a month.
The September Jobs report was coming out on Friday – the forecasts expected to look at 50,000 new jobs last month – but the shutdown was delayed indefinitely.
The economy is sending mixed signals, however. The GDP growth occurred at a strong 3.8% annual speed during April to June, reversing a decline of 0.6% in the first three months of the year. But it is not yet clear whether concrete growth can continue, or if it will promote a reversal in hiring.
“Economy is very high on a ‘knife edge”, “Michael Linden said, senior policy partner of left leaning Washington Center for equitable development. “Economic data is still indicating in different directions. The growth of GDP of the second quarter was strong, but how incredibly weak first quarter was only one bounce back, GDP GDP is difficult to know. We know to ensure that the economy is building less jobs, wages are slow, and middle class consumers are being chosen.”
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Associated press writer Fatima Hussain contributed to this story in Washington.