US Government Shutdown Looms: 800,000 Jobs at Risk
A potential US government shutdown looms, with Vice President JD Vance warning of its likelihood after a failed meeting between President Donald Trump and Democratic representatives. Around 800,000 civil servants could be affected, with a shutdown expected to have a noticeable impact on both people and businesses.
The economic impact of a shutdown depends on its duration, with potential losses ranging from $2 to $6 billion per week. However, this is practically negligible compared to the nearly $30 trillion annual economic output. Both sides blame each other for the potential shutdown. Democrats link an extension of government funding to the continuation of expiring healthcare services, while Republicans insist on treating the issue separately.
A longer shutdown this time could cause even more turmoil, given Trump's trade wars and disputes with the central bank have already caused uncertainty in the global economy. There have been 14 partial government shutdowns since 1981, with the most recent lasting 35 days in 2018/2019 due to an immigration dispute. A shutdown could delay the release of the monthly jobs report, causing uncertainty in markets and at the US Federal Reserve ahead of its next interest rate decision on October 29.
If Congress does not extend funding, hundreds of thousands of federal employees could face furlough, and various services could be disrupted. The last shutdown in 2018/2019 cost the US economy around $3 billion, or 0.02 percent of GDP. The economic impact may be small, but the disruption to services and uncertainty caused could be significant.
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