The current shutdown of the US government is the longest ever recorded, and there is no indication of an end in sight; thus, its effects on the economy are increasing.
The shutdown has exceeded the previous record of the first term of President Donald Trump, in early 2019. Each passing week costs the economy between $10 billion and $30 billion according to the estimates of analysts, and some in the $15 billion budget.
Historically, the blow to the economic growth was short-term, and furloughed workers received back pay, and the federal government compensated for the lost spending after the reopening.
It is the one that will cause greater harm, not only due to its length, according to economists. The economy is weaker than it was seven years ago, and there is a significant number of Americans worrying about inflation and employment opportunities. And in contrast to the case of the 2018-2019 shutdown, the blowback is not just federal employees who are now deprived of paychecks but also the millions of Americans who are now missing full access to food benefits to make it to the holidays.
“The long-term record is that government shutdowns do not create disaster,” as Jonathan Millar, a senior US economist at Barclays, said. “This time could be different.”
The shutdown will reduce the fourth-quarter growth by up to 2 percentage points, depending on its length.
