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Economic growth

Government Shutdown to Have Devastating Effects on U.S. Economy

Strategic Insights

— 1 min read

The ongoing government shutdown has severe economic consequences, according to the nonpartisan Congressional Budget Office (CBO). House Budget Chairman Jodey Arrington (R-Texas) released a statement highlighting the CBO's concerns, stating that the shutdown is increasing unemployment, reducing consumer spending, and diminishing private-sector income. The CBO warns that the longer the shutdown continues, the more severe its negative impact on the economy will be, with some effects lingering even after the government reopens.

Key Takeaways:

  • The Congressional Budget Office (CBO) has confirmed that the government shutdown is increasing unemployment and reducing consumer spending.
  • The CBO warns that the longer the shutdown continues, the more severe its negative impact on the economy will be, with some effects lingering even after the government reopens.
  • Real GDP will take a temporary hit due to the shutdown.
  • Delays or cancellations of federal economic data will leave the Federal Reserve with less information for key monetary policy decisions.
  • Some businesses will be unable to obtain necessary federal permits, certifications, or loans.
  • The tourism and travel industry will suffer economic losses due to the shutdown.
  • House Budget Chairman Jodey Arrington (R-Texas) blames Democrats for playing "partisan games at the expense of the American people's livelihoods" by holding the government hostage over demands for $1.5 trillion in new spending on "woke and wasteful policies."

Statistics:

  • The unemployment rate will rise temporarily as federal operations and paychecks are paused.
  • Consumer spending and private-sector income will decline until the government reopens.
  • Real GDP will take a temporary hit due to the shutdown.
  • Delays or cancellations of federal economic data will leave the Federal Reserve with less information for key monetary policy decisions for 17 days after the House passed a clean continuing resolution.

Sources:

Source 1: The nonpartisan Congressional Budget Office (CBO).

Source 2: U.S. House of Representatives Committee on the Budget.

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