Washington – The closure of the federal government usually does not leave much economic damage. But the person who started on Wednesday seems more dangerous, not the least of which is because President Donald Trump threatens to use the confrontation to permanently eliminate thousands of government jobs and that the state of the economy is already risky.
At the present time, the financial markets ignore the impasse as just the failure of Republicans and Democrats to agree on the budget and maintain the operation of the government.
Independent economist Ed Yardini wrote in a comment on Thursday: “Everyone seems completely satisfied with the closure, assuming that Democrats and Republicans will communicate and life will continue, as was the case in the previous closure,” said independent economist Ed Yardini in a comment on Thursday. “History can definitely be repeated, especially with a man known to formulate deals in the Oval Office.”
But given the chasm that separates the two political parties, Yardini added, “Not somewhat cautiously suddenly suddenly.”
The United States government has now closed 21 times in the last century. The last of that was the longest closure – extending five weeks in December 2018 to January 2019 during the first period of Trump.
Even this barely left a sign of the largest economy in the world: the Congress budget office estimates it Just shaved 0.02 % Outside 2019 US GDP – the country’s product of goods and services.
The economic effect of closure is usually transient. Federal workers get the leave and the federal government delay some spending while they are continuing. When they end, Federal workers return to their jobs and collect wages, and the government spends the late money that it has blocked. It is a large washing.
“The government closure is uncomfortable and chaotic. Usually, the lost economic activity is recovered, if it is meaningful in the first place, in the next quarter,” said Scott Hillvinstein, head of the investment strategy at the Global Investment Company X.
Government benefits payments that provide decisive support for millions of Americans, such as social security and health care programs such as Medicare, will not be disabled due to the closure.
Data from previous closure showed a little impact on the US gross domestic product unless it was extended, according to CBO Phillip Swagel Director. “The effect is not immediate, but over time, there is a negative impact to close the economy,” recently told Associated Press.
The damage can be worse.
First, some government agencies avoid closing 2018-2019 because they have received presented funding and can continue to work. This did not happen this time: The Central Bank of Oman estimates that about 750,000 federal employees can be suspended.
Trump also studies something more destroyed: the budget office has threatened to collectively shoot federal workers this time, and not only put them on temporary vacation.
The “reduction in power” will not only prepare for employees, but also removes their positions, threatening more disturbances with a working force It was already cleared by Trump. The president said on Tuesday: “We will drop many people who will be affected very, and they are democrats. They will be democratic,” the president said on Tuesday.
“It is reasonable to assume that (Trump’s collective threat) is political, aimed at pressure on Democrats to agree to extend funding without concessions.” But he added: “If you continue, it may have long -term consequences, which extends to reducing the size of the government and maintaining the sector as a wound on salaries next year.”
Ryan Sweet, the US Senior Economist in Oxford Economy, appreciates that closing of income and temporary loss of federal workers can fly 0.1 to 0.2 percentage points from the country’s annual growth rate in the fourth quarter of each week, the government is closed. Some of this will be recovered once it is reopened.
“The economic costs of closing the government are usually small unless it lasts for several weeks,” Sweet wrote.
The confrontation also comes at a time when the labor market is already under pressure, and it is damaged by the ongoing effects of high interest rates and uncertainty about Trump’s wrong campaign to slap tax on imports from almost every country on Earth and specific products – from copper to copper Foreign films.
Reviews of the Ministry of Labor showed earlier this month that Economy created 911,000 jobs lower It was originally mentioned in the year that ended in March. This means that employers added less than 71,000 new jobs per month during that period, not 147,000 jobs that were reported for the first time. Since March, job creation has slowed more – to 53,000 average a month. During the 2021-2023 recruitment boom that followed the Covid-19s, in contrast, the economy created 400,000 jobs per month.
The job report was supposed to come out on September on Friday – the predictors were expected to see 50,000 new jobs last month – but they were It was delayed to the closure.
The economy sends mixed signals. GDP growth came at an annual rate of 3.8 % from April to June, reflecting a 0.6 % decrease in the first three months of the year. But it is not yet clear whether this strong growth could continue, or whether it will stimulate a recovery in employment.
“Economy is at the edge of a knife,” said Michael Linden, a great co -worker at the Washington Center, who tends to grow, said. “Economic data refers to different directions at the present time. GDP growth in the second quarter was strong, but the amount of what was just a bounce of the weak gross domestic product incredibly, difficult to know. What we know is certain is that the economy creates less functions, the growth of wages is affected, and consumers feel the middle layer of disc.
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The Associated Press writer Fatima Hussein in Washington contributed to this story.