Economists Say Shutting Down Government Will Hurt Economy


The shutdown of the US government will hit an economy struggling to sustain its post-crisis rebound, but economists say the impact will only be substantial if it lasts weeks.

There was no compromise in sight Monday that could prevent an impasse over a stopgap budget bill from forcing a partial government closure on October 1, the beginning of the fiscal year.

That would put more than 800,000 non-essential government workers on unpaid furlough, crimping their spending, and deny important services to citizens and businesses.

It would also slow the flow of funds to government contractors, another effect that would mount the longer the shutdown continues.

Consultants Macroeconomic Advisors said the shutdown would slow growth, which registered a 2.5 percent annual pace in the second quarter and is expected to remain there for the third.

A two-week shutdown would cut 0.3 percentage point off of gross domestic production, all of that in the government.

“Because we expect any shutdown to be brief, induced effects on private production and repercussions in financial markets would be modest,” they said.


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