US government shutdown starting to effect economy

The longest US government shutdown is putting a strain on the economy.

US flag during government shutdown Source: Bloomberg

The US government shutdown is starting to impact the overall US economy. The federal government estimates that the shutdown is already costing the US $50 million a day. The longest government stoppage in history is having a negative effect throughout the nation.

How government workers can impact unemployment figures

US President, Donald Trump, and the US Congress are still at odds about how to fund the government. While they’re battling about whether to fund a border wall for $5 billion, many workers are caught in the middle. With many government workers being furloughed, they are turning to the unemployment line. After surviving for a month without pay, many are filing for unemployment benefits. John Woodson, a federal contractor, is seeking compensation as a last resort.

‘We should still be at work right now. Politicians should handle this — don't put this on the citizens. You're hurting us,’ said Woodson.

The increase in thousands of workers filing for unemployment could hurt future jobs reports. Investors could be scared by a declining report and lead to stagnation in the economy.

How the shutdown can affect labor market

In addition to federal workers filing for employment, many are looking on job search sites for new jobs as well. With many employers hiring, the federal government could lose many talented workers if the government shutdown drags on, according to Martha Gimbel, Indeed’s director of economic research.

‘With the shutdown occurring in a tight labor market, many workers have other options, and they seem to be trying to take advantage of them.If the shutdown leads to a loss of talent for the federal government, it could be harder for it to compete for new hires in a labor market this tight,’ said Gimbel.

Can the US economy survive the government shutdown?

The economy is already volatile, and a prolonged government shutdown can lead to an economic downturn.

‘The economy could easily stall in the first quarter, and then the question is what happens in the second. The longer it goes on, the longer it takes to recover,’ said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

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