Washington (AP) – The abandonations of the federal government generally do not leave much economic damage. But the one who started on Wednesday looks risky, not least because President Donald Trump threatens to exploit the patient situation to permanently eliminate thousands of state jobs, and the condition of the economy is already precarious.
Currently the financial markets twitch the dead end as the latest failure of republicans and democrats to agree on a household and keep the government going.
“Everyone seems to be quite complacent about the closure, provided that the Democrats and Republicans will end up with life and life will continue, as was the case with previous closings,” wrote the independent economist Ed Yardeni on Thursday in a comment. “The story could certainly be repeated, especially with a man who is known to act in the Oval Office. ”
In view of the gap that the two political parties separated, Yardeni added: “The lack of caution is a bit surprising.” “
The US government has now closed 21 times in the last half century. The last of these shutdowns were the longest – in December 2018, in January 2019, five weeks stretched during Trump’s first term.
Even this has hardly shaped the largest economy in the world: the Congress budget office estimates that it is only 0.02% discount on the domestic product of US -Bretto -Butto -Sland -the performance of goods and services through the country.
The economic effects of shutdowns are usually fleeting. Federal workers are triggered and the federal government delays some expenses while they have the existence. When they are over, the federal workers return to their workplaces and collect the repayment, and the government is delaying the money that has held them back. It’s pretty much a laundry.
“The state shutdowns are impractical and chaotic,” said Scott Helfstein, head of the investment strategy of the investment company Global X. “However, there is hardly any indications that they have a significant influence on the economy. As a rule, the lost economy is restored in the following quarter.”
The state payments that offer millions of Americans such as social security and health programs such as Medicare do not bother decisive income support due to the closure.
According to CBO director Phillip Swagel, data from previous shutdown have shown only slight effects on the US BIP. “The effects are not directly, but over time the economy has had a negative impact,” he recently told The Associated Press.
The damage could be worse if it deals.
First, some governmental authorities in the 2018-2019 shutdown have changed because they had received a means in advance and could simply continue operating. This time this did not happen: the CBO estimates that around 750,000 federal employees could be temporarily released.
Trump is also considering something more destructive: This time his household office threatened the mass firing of federal workers, not just on vacation.
A “reduction in strength” would not only dismiss the employees, but also remove their positions and threaten more upheavals for a workforce that was already flushed by Trump. “We would be released many people who will be very affected and they are Democrats. They will be democrats,” said the President on Tuesday.
In a comment, Thomas Ryan from the capital economy wrote that “it is reasonable to assume that (Trump’s mass release threatens) is a political striker who aims to put the democrats under pressure to approved a financing extension without concessions.” But he added: “If it is followed, it could have long -term consequences and extend the government and keep the sector as a wear and tear of the salary statements into the next year.”
Ryan Sweet, head of the US economy at Oxford Economics, estimates that the closure and the fleeting loss of income for federal workers 0.1 to 0.2 percentage points from the country’s annual growth rate in the fourth quarter for every week for each week that the government could shave from the week of the country. Some of it is restored as soon as it is reopened.
“The economic costs of the state closures are usually minimal, unless they last for several weeks,” Sweet wrote.
The production also comes at a time when the labor market is already stressed and by the persistent effects of high interest rates and uncertainties in relation to Trump’s unpredictable campaign, taxes on imports from almost every country on earth and to certain products – from copper to foreign films.
The revisions of the Ministry of Labor showed at the beginning of this month that the economy created 911,000 jobs less than originally in March, which ended in March. This meant that the employers added average less than 71,000 modern jobs per month during this period, not the 147,000 reported. The creation of jobs has slowed down even more since March – to average 53,000 per month. During the settings boom from 2021-2023, which followed after Covid-19 closures, the economy, in contrast to this, created 400,000 jobs per month.
The September Job report should come out on Friday -Prognostics expected to experience 50,000 modern jobs last month -but was delayed indefinitely by switching off.
However, the economy sends mixed signals. GDP growth reached a powerful annual pace of 3.8% from April to June and increased by 0.6% in the first three months of the year. However, it is not yet clear whether this solid growth can be continued or whether it causes a rebound when setting.
“The economy is a lot of a” knife “edge,” said Michael Linden, Senior Policy Fellow at the left-wing Washington Center for just growth. “The economic data is currently showing different directions. GDP growth in the second quarter was strong, but how much of it was only a jump from incredibly weak GDP in the first quarter is difficult to know. We know that the economy creates fewer jobs, slowing down the wage and the consumers feel linked in mid-range.”
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The Associated Press Writer Fatima Hussein in Washington has contributed to this story.
