A government shutdown in the United States occurs when Congress fails to pass a budget bill on time. This can lead to the closure of many non-essential government agencies and services. The economic impact of a government shutdown can vary depending on its length and severity, but it can generally lead to a slowdown in economic growth, job losses, and disruptions to businesses and consumers.
Here are some of the potential economic impacts of a government shutdown:
- Reduced economic growth: Government spending accounts for a significant portion of the US economy. A shutdown can lead to a decrease in government spending, which can have a ripple effect on the rest of the economy. Economists estimate that a shutdown could cost the US economy billions of dollars per week.
- Job losses: Government shutdowns can lead to job losses for both federal employees and contractors. These job losses can have a negative impact on the economy as a whole, as consumers have less money to spend.
- Disruptions to businesses and consumers: A government shutdown can disrupt businesses and consumers in a number of ways. For example, businesses may have difficulty obtaining government permits or services. Consumers may also have difficulty accessing government benefits or services.
In addition to the economic impacts, a government shutdown can also have a negative impact on public morale and confidence. It can also damage the US's reputation on the world stage.
The longest government shutdown in US history lasted 35 days in 2018-2019. That shutdown cost the US economy about $11 billion and led to the furlough of over 800,000 federal employees.
It is important to note that the economic impact of a government shutdown can vary depending on a number of factors, such as the length of the shutdown, the time of year it occurs, and the overall state of the economy. However, even a short shutdown can have a negative impact on the economy.