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In the likely case of a federal government shutdown anytime after funding run out on September 30, Goldman Sachs Group Inc. predicts a short-term impact to the US economy, followed by a comeback.
Goldman’s team of economic experts forecasts that a comprehensive government shutdown could lead to a weekly reduction of 0.2 percentage points in U.S. GDP growth, along with supplementary ramifications for the private sector. Goldman predicts that the losses incurred during the shutdown will be recuperated in the subsequent quarter.
In a communication to clients on Sunday, a senior U.S. political economist at Goldman Sachs conveyed, “It appears increasingly probable that the federal government will undergo a temporary shutdown later this year.”
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Furthermore, unlike the prior debate to increase the debt ceiling earlier this year, the current political dispute over spending lacks the potentially catastrophic consequences, as the United States faced the risk of defaulting on certain obligations. However, Goldman Sachs indicates that this “raises the chances of Congress failing to take action in a timely manner” regarding the funding legislation.
Additionally, forecast suggests that “previous shutdowns haven’t triggered significant reactions in the markets,” with stock performance remaining unchanged or even positive during shutdowns in 1995–96, 2013, and 2018–19.
Last month, lawmakers departed for an August recess without resolving the fiscal 2024 funding bills. The House is not slated to reconvene until September 12, with a to-do list encompassing the clearance of 11 out of the 12 annual appropriations bills and the resolution of disparities with the Senate in just 12 scheduled working days of the month.
(Inputs from Bloomberg)
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Source: wionews.com
