US could see zero growth this quarter due to government shutdown

If the partial government shutdown in the United States extends until March, there’s a chance the country will face no economic growth this quarter.

US flag Source: Bloomberg

If the partial government shutdown in the United States (US) extends until March, there’s a chance for the country to face no economic growth this quarter, cautioned the chairman of the White House council of economic advisers.

‘It is true that if we get a typically weak first quarter and extended shutdown that we could end up with a number that is very low,’ or ‘very close to zero’, said the council’s chairman Kevin Hassett in a CNN interview.

However once the government reopens, a rebound of ‘4% or 5%’ could be seen for the second quarter, he added.

Mr Hassett’s opinion is more neutral compared to a survey polled by Bloomberg where analysts predict economic growth for the quarter to contract by 2% if the closure lasts through March.

Experts predict the federal government to reopen by mid-February.

Americans unsettled by the shutdown

A majority of Americans in recent national polls are displeased with US president Donald Trump for using the government shutdown as an attempt to get his border policy approved.

The shutdown is the longest in the nation’s 242-year history, and around 800,000 federal workers are currently going without pay. The cascading effect of the shutdown has also affected local eateries and shops near the major federal offices, said local reports.

The congress has approved a proposal to give back pay for federal workers affected by the shutdown, but their pay checks will only come in after Washington reaches a deal.

Some small businesses with federal contracts or are waiting for government approvals on certain proposals are sweating on the delays. Simple liquor licences for example, are taking longer to approve due to the red tape.

According to White House’s estimates, the shutdown is costing America 0.13 percentage point in growth every week.

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