US government shutdown starting to effect economy

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

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.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

See an opportunity to trade?

Go long or short on more than 17,000 markets with IG.

Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.


Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.