Associated Press: The unprecedented government shutdown will increase the pain of the American economy
The Associated Press reported that the government shutdown in the United States, which lasted for six weeks and ended today, Thursday, will constitute an additional burden on an economy already facing many challenges, although measuring the full impact will take months.
The agency added, in a report published today, Thursday, that about 1.25 million federal employees have not received their salaries since the first of last month, and about 10,000 flights have been cancelled. Since last week, the unrest will continue, according to officials, even as air traffic controllers return to work, the pace of awarding government contracts has slowed, and benefits for many food aid recipients have been cut off. Some deferred purchases are never made.
According to (AP), the government shutdown has also cut off the flow of economic data on jobs, inflation and consumer spending, which may prompt the Federal Reserve to cancel what was expected to cut interest rates at its next meeting in December.
The US Congressional Budget Office estimates that a six-week government shutdown will reduce growth in the fourth quarter of this year by about 1.5 percentage points; This would cut growth by about half compared to the third quarter.
Reopening the government is expected to boost growth in the first quarter of next year by 2.2 percentage points, according to projections from the Congressional Budget Office, but about $11 billion in economic activity will be permanently lost.
The agency explained that the longest previous government shutdown in the United States, in the period 2018-2019, It lasted 35 days, but it only partially closed the government because many institutions were fully funded. The Congressional Budget Office stated at the time that the closure only harmed the economy by about 0.02% of GDP.
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