Here’s a question about the closure submitted by Associated Press reader Ryan S.:
What consequences could the shutdown have for the US economy?
Federal government shutdowns typically don’t cause much economic damage. But the one that started on Wednesdaylooks riskiernot least because presidentDonald Trumpthreatens to use the stalemate to permanently eliminate thousands of peoplegovernment jobsand the state of the economy is already precarious.
For now, financial markets are shrugging off the impasse as the latest failure of Republicans and Democrats to agree on a budget and keep the government running.
Let’s look at a range of possible economic impacts:
- A few days: Financial markets may experience some fluctuations, but these are unlikely to be significant if funding is restored in the foreseeable future. Workers will be paid back, and ideally there won’t be much of an economic slowdown.
- Longer term: Federal workers are furloughed and the federal government postpones certain expenses during a shutdown. But when the funding comes back, workers go back to work and collect wages, and the government spends the money it withheld too late. It’s pretty much a wash.
- Very long term: if there are significant disruptions in sectors such asair travelDue to circumstances related to the shutdown – such as the security researchers and air traffic controllers calling in sick during the 2018-2019 shutdown – that could spell more trouble for the industry. But even during that 35-day shutdown, the longest in U.S. history, the Congressional Budget Office estimates thatonly 0.02% was shavedof US gross domestic product in 2019, the country’s production of goods and services.
Also: Trump has threatened to permanently cut thousands of government jobs during this shutdown, so if that happens and new groups of people are immediately thrown out of work, it could disrupt the economy.already precarious economy. We just don’t know yet whether those layoffs will happen.
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Do you have one?question for APabout the government shutdown? That’s possiblesubmit it here.
—Meg Kinnard, Associated Press
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