Significant disagreement within Congress sent the US Government into shutdown on the 1st of October. Thursday marked the Senate’s seventh rejection of a spending bill, and no further progress will be made until at least Tuesday (14th of October). With no fixed end in sight, the economy suffers, various industries face disruption, and federal workers lose their livelihoods.
Publication of official economic data has been halted amid the shutdown, including the Consumer Price Index (CPI) report and the US jobs report. This may have an impact on upcoming Federal Reserve meetings, leaving federal policy with a gap in its findings ahead of the year’s close. It is estimated that a government shutdown can reduce Gross Domestic Product (GDP) growth by 0.01% for each week it continues. Commercial real estate deals are slowing as a result of dwindling investor confidence and lowered consumer demand, considerably impacting small businesses and the hospitality industry. Financial uncertainty in previous shutdowns has stalled funding in the construction sector and in affordable housing projects.
Lay-offs are expected to total over 4,000 workers across seven federal departments, and around 750,000 workers have been furloughed throughout the shutdown. Air travel has experienced delays and additional waiting times due to workers in air traffic control and the Transportation Security Administration (TSA) not being paid. Passport services will also see delays, although they remain operational. More substantially interrupted, the Smithsonian Institution’s twenty-one federally funded museums risk public closure, to the detriment of tourism.
It is unclear how long the shutdown will last; the US government shutdowns of December 2018, 1995, and 2013 lasted for 35 days, 21 days, and 16 days respectively. Economic output was estimated to have reduced by $11 billion after the 2018 shutdown, highlighting the dire impact which undoubtedly extends globally.
Written by Toby K
Sources: BBC, CNBC News, CBS, J.P. Morgan
Image: Unsplash
US Shutdown Disrupts Industries
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