AP reader question: How might the federal shutdown affect the economy?
Share and Follow


Here’s a question about the shutdown submitted by an Associated Press reader, Ryan S.:

How might the shutdown affect the U.S. economy?

Shutdowns of the federal government usually don’t leave much economic damage. But the one that started Wednesday looks riskier, not least because President Donald Trump is threatening to use the standoff to permanently eliminate thousands of government jobs, and the state of the economy is already precarious.

For now, financial markets are shrugging off the impasse as just the latest failure of Republicans and Democrats to agree on a budget and keep the government running.

Let’s take a look at a range of possible economic effects:

    1. A couple of days: Financial markets may experience some fluctuation, but that likely won’t be significant if funding is restored before too long. Workers will get paid back, and ideally there’s not much of an economic lag.

    2. Longer term: Federal workers get furloughed and the federal government delays some spending during a shutdown. But when the funding comes back, workers go back to their jobs and collect back pay, and the government belatedly spends the money it had withheld. It’s pretty much a wash.

    3. Very long term: If there are significant disruptions to sectors like air travel due to shutdown-related circumstances — like the security screeners and air traffic controllers who called out sick during the 2018-2019 shutdown — that can mean more trouble for industries. But even in that 35-day shutdown, the longest in U.S. history, the Congressional Budget Office estimates that just 0.02% was shaved off 2019 U.S. gross domestic product, the nation’s output of goods and services.

Also: Trump has threatened to permanently eliminate thousands of government jobs during this shutdown, so if that happens, and new tranches of people are immediately out of work, that can upset an already precarious economy. We just don’t know yet if those layoffs will happen.

___

Do you have a question for AP about the government shutdown? You can submit it here.

Share and Follow
You May Also Like
Lakeview, Chicago Our Lady of Mount Carmel students to serve Mass with Cardinal Blase Cupich Thursday in Rome

Students from Our Lady of Mount Carmel in Lakeview, Chicago, to Assist Cardinal Blase Cupich at Rome Mass on Thursday

ROME (WLS) — On Thursday, some of the Chicago Catholic school students…
Kansas City deli gets nationwide attention after Jason Kelce shoutout

Kansas City Delicatessen Gains National Spotlight Following Mention by Jason Kelce

KANSAS CITY, Mo. — A Kansas City deli owner is seeing a…
Oregon general's comments raise eyebrows a week later

Oregon Attorney General’s Remarks Still Causing Stir One Week On

() Comments from Oregon’s top military leader, testifying before state lawmakers several…
Here are the airports experiencing staff shortages due to government shutdown

These airports are facing staff shortages because of the government shutdown

Staffing shortages are contributing to ground delays, longer wait times and travel…
Millie Bobby Brown, 21, shares first look at adopted baby girl

Millie Bobby Brown, 21, Unveils Adorable First Glimpse of Her Adopted Baby Girl

Millie Bobby Brown gave an insight into new motherhood as she shared…

Two Pennsylvania State Police Officers Injured in Shootout That Kills Suspect

CHAMBERSBURG, Pa. (AP) — Two state police officers in Pennsylvania pursuing a…
Four found dead in million-dollar San Francisco home as police probe ‘suspicious’ deaths

Four found dead in million-dollar San Francisco home as police probe ‘suspicious’ deaths

NEWYou can now listen to Fox News articles! Four people have been…
Baker and Taylor closes in Momence in Kankakee County, Illinois without warning, leaving hundreds unemployed

Baker and Taylor Unexpectedly Shuts Down in Momence, Illinois: Hundreds Left Jobless

MOMENCE, Ill. (WLS) — Just months after losing one of its largest…