Prolonged US shutdown threatens to unsettle economy

Thousands of government workers are forced to stay home or work without pay due to budget shortages that are also hampering the publication of certain government indicators.

03 January 2019 | Economics

The impasse is already cutting into the supply of something that is essential to just about every market out there: federal economic data. – Diane Swonk, Chief Economist: Grant Thornton

Virginie Montet - The paralysis triggered by the US government shutdown could have unexpected consequences, such as muddying economic statistics just as the markets are extremely reactive to any whiff of uncertainty.

More than a week into the game of chicken between president Donald Trump and Democrats in Congress, the publication and recording of statistical indicators are being delayed.

With the lack of an agreement on Trump's much-promised wall on the border with Mexico, thousands of government workers are forced to stay home or work without pay due to budget shortages that are also hampering the publication of certain government indicators.

"There will be no lockups for Census or BEA (Bureau of Economic Analysis) and no posting of lockup data from either of those organisations because of the government shutdown affecting those agencies," said Labour Department spokeswoman Suzanne Bohnert, whose agency oversees the release of those indicators under embargo.

The release of data on new home sales is so far the only indicator to have been delayed.

But if the shutdown is still in effect after January 1, it could impact the release of figures on construction expenses, such as industrial orders, and on trade - due January 8 - which is critical for markets just as the Trump administration is involved in a full-fledged trade war with some US allies.

The closely watched employment figures for November, usually published the first Friday of the month, are set to be released on January 4 on schedule because the Labour Department still has funds to keep running its operations.


In addition to the publication of data, the very process of collecting this information is also beginning to be compromised.

"Odds are that it'll continue into January," Grant Thornton chief economist Diane Swonk said in a tweet.

"The impasse is already cutting into the supply of something that is essential to just about every market out there: federal economic data. That could have an impact on markets going forward and also what the Federal Reserve decides to do with interest rates in 2019."

With financial markets already extremely volatile and amid worries over tariffs with China and the Fed's monetary policy, the shutdown could add yet another layer of uncertainty.


The partial paralysis of administrative services will likely only have a mildly negative impact on economic growth, even though it's more tangible in the US capital, where affected government workers won't get paid.

"Thousands of federal workers would either be furloughed or work without pay for the duration of the shutdown," Oxford Economics said.

"While the economic impact of two-week partial shutdown would be minimal - less than 0.1% of GDP growth - it would add political uncertainty at an inopportune time.

"Among other things, a shutdown would affect the release of economic indicators and disrupt the start of the 2019 tax filing season."

Washington Mayor Muriel Bowser urged Trump to find a solution to end the stalemate, noting the capital's 170 000 federal workers "pay the highest price."

These furloughs also have unexpected consequences for the private sector.

On Friday, the National Association of Realtors expressed concern about the shutdown's impact on home sales.

"Very disappointingly, flood insurance has not been available during the government shutdown ... which means that roughly 40 000 homes may not get transacted because it requires flood insurance in order to get a mortgage," NAR chief economist Lawrence Yun said.

"Any time there is a government shutdown, consumer confidence may be dampened, so even if they have the cash, they may not spend the money, and that will hold back economic growth, so it's bad news all around." – Nampa/AFP

Similar News


Life compared to the Big Apple

1 day - 17 July 2019 | Economics

Jo-Maré Duddy – Consumers’ burden over the past 12 months has lightened somewhat compared to fellow shoppers elsewhere in Africa: Namibia is currently rated as...

Keeping up with the neighbours

1 day - 17 July 2019 | Economics

LuandaYou would need around US$2 535.97 in Windhoek to maintain the same standard of living that you can have with US$7 600 in Luanda, assuming...

Zim inflation almost doubles, stirring memories of economic chaos

1 day - 17 July 2019 | Economics

MacDonald Dzirutwe and Karin Strohecker - Prices of cooking oil and other basics soared in Zimbabwe as inflation nearly doubled in June, piling pressure on...

German investors turned off

1 day - 17 July 2019 | Economics

German Bundesrat (Federal Council) president Daniel Günther says German investors are ready to invest in Namibia, but policy uncertainties around wealth redistribution and property rights...

Refugees target global markets with luxury crafts

1 day - 17 July 2019 | Economics

Nita Bhalla - Rwandan refugee Anita Claudine knows the odds are stacked against her, but the fashion designer is unfazed in her ambition to one...

Filing tax returns online

2 days ago - 16 July 2019 | Economics

Elizabeth Joseph The Integrated Tax Administration System (ITAS) is a technology solution that allows taxpayers to file their returns online, which creates ease and comfort.A...

Economic panel targets N$14bn

2 weeks ago - 04 July 2019 | Economics

The high-level panel on the Namibian economy is scheduled to host an investment summit at the end of this month, which will ignite the process...

West African 'eco' dream gives economists nightmares

2 weeks ago - 03 July 2019 | Economics

Philippe Siuberski and Malick Rokhy - For decades it was a dream of West African finance ministers: ushering in a regional single currency to boost...

Not everybody a winner in record US expansion

2 weeks ago - 03 July 2019 | Economics

Trevor Hunnicutt - Last month Pink Floyd frontman David Gilmour sold his guitar collection for US$21.5 million, including one piece - his famed "Black Strat"...

Hunger for beef offers rewards, risks for pastoralists

2 weeks ago - 03 July 2019 | Economics

Célia Lebur - With over 200 million people and an emerging middle class, Nigeria is witnessing a boom in demand for meat that offers potential...

Latest News

Geingob stirs pot

4 hours ago | Politics

President Hage Geingob is meeting Swapo regional leaders across the country in the afternoons, after his ongoing town hall and regional meetings with the public.In...

Mujoro denies dodging 'independent' prickly...

4 hours ago | Politics

Electoral Commission of Namibia (ECN) chief electoral officer Theo Mujoro has denied dodging the prickly subject of independent candidates standing in elections in the country,...

Respect is a two-way street

4 hours ago | Columns

The ongoing debate unfolding in the National Assembly, which puts social cohesion in the spotlight, is quite interesting. For far too long we have observed...

Vendors in despair

4 hours ago | Agriculture

Mahangu flour vendors operating at various open markets in Rundu are struggling to pay back loans they took to purchase unprocessed grain from farmers, because...

State sued for N$3.8 million

4 hours ago | Justice

A man who was cleared of murder and robbery charges after he had spent more than five years in jail awaiting the completion of his...

Oshakati abattoir to reopen soon

4 hours ago | Agriculture

KIAT Investment Holdings, which has been awarded a tender to manage the Oshakati abattoir, says the plant will soon resume operations.This will be a relief...

NNFU sheds regional functions

4 hours ago | Agriculture

The Namibia National Farmers Union (NNFU) has underwent a restructuring exercise that has seen it shed some its regional operations.NNFU executive director Mwilima Mushokobanji said...

'We are not fighting'

4 hours ago | Government

President Hage Geingob held a town hall meeting in Mariental on Monday, and was in Keetmanshoop yesterday, where he assured residents that his administration is...

B1 City fraud accused loses...

4 hours ago | Justice

Hafeni Nghinamwaami, one the three businesspeople implicated in the fraud and corruption case surrounding the B1 City property development project, is without legal representation after...

Load More