Shutdown Continues Without Agreement
The US government has entered a prolonged shutdown as lawmakers fail to agree on key spending bills. The ruling and opposition parties have been deadlocked over the issue for 31 days now. According to CBO, the shutdown has already erased $7 billion, more than over Rs. 62,149 crores, from the American economy.
Economic Loss Estimates Climbing
According to the CBO, a calculated $7 billion in permanent economic damage has been caused by the shutdown so far. If it continues, the losses could reach $11 billion in six weeks and $14 billion in eight weeks.
Diane Swank, chief economist at KPMG, said the economic impact will be small at first but will likely grow more serious over time. Mark Zandi of Moody's Analytics added that the US economy is already weak, and a continued shutdown could make conditions worse.
Shutdowns are nothing new to the US
The federal government of the US has shut down 15 times since 1981. The longest so far was during the presidency of Donald Trump, which lasted 35 days between 2018 and 2019. Experts now fear the current shutdown could top that record, as there are still no signs of compromise among lawmakers.
Impact on Employment and Investments
Economists pointed out that the job market, which was already showing some signs of weakness, has also been impacted by the ongoing shutdown. With so much uncertainty about economic and policy conditions, many companies are choosing not to invest. Other companies are turning to automation and artificial intelligence, lessening their reliance on workers and setting off layoffs.
Risk of Long-Term Economic Damage While the effects of the shutdown are negligible for now, experts say that a prolonged shutdown could impact economic growth. It might affect the financial markets and shake public confidence. According to estimates by analysts, if the shutdown continues, the country's GDP could fall by 0.1 to 0.2 percentage points per week.
