The Economics Of A Government Shutdown

October 1, 2013 in Daily Bulletin

The BBC had a couple articles that looked at what the government shutdown means:

  • The last time the government shutdown in the 90s, it cost the government $2.1 billion in today’s dollars.
  • If the shut down continues for three weeks it is estimated to reduce GDP growth by up to 0.9% this quarter.
  • The stock markets have remained stable thus far – one member of the business community notes that they have become “numb” to “Washington posturing” over the past five years.
  • But while the markets are stable, half of all bosses believe that the budget drama has had a negative impact on employee hiring.
  • The shutdown will have the largest impact on the economy of the capital, Washington DC, where the federal government accounts for a third of the economy.
  • Depending on the length of the shutdown, the release of statistics about American jobs might be delayed, as might the IPO of Twitter.
  • Many employees who “provide for the national security” may have to work without pay.

Read more here and here.

Source: BBC