What Would it Cost to Shutdown the US Government?

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A shutdown of the U.S. government would reduce fourth-quarter economic growth by as much as 1.4 percentage points depending on its length, economists say, as government workers from park rangers to telephone receptionists are furloughed. A shutdown would slow the expansion because output lost when workers are furloughed subtracts from gross domestic product. The combined prospect of a budget standoff between the White House and Congress and haggling over the debt ceiling could have a bigger impact on the economy as businesses hold off on investment and households delay spending. A shutdown wouldn’t be unprecedented: 17 funding gaps happened between 1977 and 1996, and in 1995 and 1996 shutdowns cut GDP by 0.25 percentage point in the fourth quarter of 1995.

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