Government Shutdown Enters Fifth Week and Could Trigger Recession
First quarter growth could slow down and even decrease if federal employees continue to go without pay, the Securities and Exchange Commission remains stagnant, and consumer confidence drops further. Trump is not phased by the market’s reaction as of yet. And if the shutdown continues, experts at Pantheon Macroeconomics say that first quarter growth could fall below zero.
Visible signs of the shut down include longer lines at airports due to TSA employees not showing up, as well as national parks with litter strewn about. Credit damage from those who couldn’t afford their living expenses without their government check could get worse if the shutdown continues.
Pressure to reach a March 1st deadline with China over trade as well as a summer deadline concerning the nation’s borrowing limit are shaking consumer confidence.
The Commerce Department failed to produce a December report on retail sales, due to lack of funding. This along with the Securities Exchange Commission failing to move on big IPOs like those planned for Uber and Lyft constitute the not so visible impacts from the shutdown.
Trump had promised a 3% sustained growth for the first quarter. The Council of Economic Affairs stated the government shutdown could push first quarter growth below 2%. Yet the incumbent President has shown no signs to give up on his demand for a wall.
