In this article by Alan Rappeport and Binyamin Appelbaum from The New York Times, they describe the more insidious effects of the longest shutdown in the U.S. government’s history. The government shutdown has been to cost the U.S. economy $11 billion with a quarter of the total permanently lost. The Congressional Budget Office (CBO) released these estimates along with the statement that the economy will suffer from “more indirect negative effects.” More specifically, businesses were unable to receive federal permits and licenses required for any improvements or investments, thus postponing any future growth that might have occurred otherwise. The notion that we will regain the economic loss as workers receive their back pay (if applicable) will most likely be negated by the nosedive in younger generations’ consumer confidence, thus having an even further negative effect on the U.S. economy. While the actual indices for consumer confidence are relatively high compared to previous years, the fears and insecurities of affected federal workers throughout this article are ubiquitous.
The fear of ever-looming shutdowns is two-pronged: there is a fear of it happening soon and the fear of it lasting for even longer next time. Due to these concerns, many federal workers affected reported to be planning on reducing their spending below pre-shutdown levels. Many are postponing major and minor purchases from eating at fast food restaurants to buying homes. This decline in consumer confidence is bound to have lasting generational cultural effects, even if the economic growth eventually returns to an expected value.
Source: https://www.nytimes.com/2019/01/28/us/politics/shutdown-cost-us-economy-11-billion-cbo-says.html
2 comments:
This article brought up many great points, the best I believe is the fact that despite the government opening back up, its’ effects will still continue to create negative outcomes that can hurt future generations. When 26-year-old Laura Dodson mentioned that she would change her spending and saving habits to make sure she had a larger cash reserve, it made me realize that we would soon be entering the same job market and have to make the same decisions. An event such as the government shutting down will make and has made people more aware of their financial states, especially when the article states that the budget office projects that in 2019, real gross domestic product will slow to 2.3% and the federal budget deficit will hit $900 billion.
Its interesting to note that younger generations' consumer confidence has been shaken the most. I also appreciate Bridget's comment because I too am going into this market and I don't really know what I think about it. Economists have been super optimistic over the past few years so it will be interesting as a brand new worker going through my first recession with actual responsibilities.
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