ECONOMIC IMPACT OF SHUTDOWNS Federal government shutdowns can be caused by the US Congress failing to authorize funding for ceiling. Shutdowns involving a furlough of US federal but only lasted one day. As with the debt ceiling, that all changed once Republican Newt Gingrich became in 1995-96. Then there was peace in the valley until 2019 with a 35-day shutdown.
The combination of a full or partial US Federal Government shutdown with a debt ceiling crisis is GDP growth. Whether the economic damage is shutdown and crisis, and secondly, on the economic environment when the crisis occurs.
The duration factor operates in a non-linear fashion. economic impact, but once the shutdown extends past a month, then multi-pay periods are missed, contractors are not paid, and the economic damage
Context matters, too, because if the economy is growing and creating jobs when the crisis occurs, then the crisis will do less damage than if the economy were in a recession. Our base case is that the economy will be growing in the 2% to 2.5% real GDP range in the second half of 2019 when the debt ceiling and shutdown crisis might occur.
Figure 3: US Federal Government Shutdowns involving Furloughs SHUTDOWN DAYS
1980 1981
1984 1986 1990
JAN 2018
1 1
1 1 5
21 16
241,000 500,000
500,000 2,800
800,000 284,000 800,000 692,900
Source: Wikipedia
https://en.wikipedia.org/wiki/Government_shutdowns_in_the_United_States
EMPLOYEES FURLOUGHED PRESIDENT 1,600
Carter Reagan
Reagan Reagan
Clinton Clinton Trump Trump
26 | ADMISI - The Ghost In The Machine | May/June 2019
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