The economy can’t shrug off the US shutdown forever
Business will generally start to slow down; there will be lay-offs and pay freezes; companies will be even more reluctant to invest — in other words, a recession
For months now, commentators and economists have been warily eyeing the US economy and asking what will cause the next recession. Risky corporate debt seemed to be building up in the system, but with profits robust and interest rates low, servicing the debt didn’t seem to be a problem. The US Federal Reserve raised rates by a modest amount, but signaled that it didn’t have much appetite for future increases. US President Donald Trump’s trade war didn’t seem to be having much effect yet. Then came the government shutdown. In an attempt to force Congress to build a southern border wall, Trump has caused about 800,000 government workers to be furloughed, or in some cases work without pay. On one hand, that’s not a huge number of workers — only about 0.5% of the labour force. And those workers are slated to receive back pay once the shutdown ends. But while they’re not earning money, it’s much harder for them to make payments on their credit-card debt, mortgages, cars, not to mention re...
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