Input Stories

Here’s what the government shutdown, effective since 12:01 a.m. EDT today, means for the economy (The Wall Street Journal, subscription).

Federal employees: The shutdown, the result of Congress’s inability to reach a deal on short-term spending by last night, means certain federal employees may go on furlough, in some cases “with pay delayed until the government reopens.”

• “The Office of Management and Budget decides which workers are ‘excepted’ from furlough, which means they are needed for emergency or essential work but are still unpaid.”
• Economists say that more than 800,000 federal workers could be furloughed as a result of this shutdown. 

The jobs report: “The Bureau of Labor Statistics said it won’t release or collect any economic data during a shutdown, which means this Friday’s monthly jobs report is in doubt.”

• Reports that get postponed will be released once the shutdown ends.
• Weekly jobless claims, however, won’t be affected because they are collected at the state level.

The private sector: “Companies that depend on the daily functioning of the government could lose business or face delays in vital approvals.”

• Private-sector job growth was ultimately slashed by about 120,000 jobs during the 16-day federal government shutdown of 2013.

Economic growth: Shutdowns depress economic activity, as the data shows.

• The partial shutdown in 2018 and 2019, which lasted more than a month, cut annualized real GDP growth by 0.4% in the first quarter of 2019.
• But the economy generally makes up for any lost economic growth once the shutdown is over, according to economists.

Tourism: “The travel economy could lose $1 billion every week in a shutdown,” according to the U.S. Travel Association.

• “Transportation Security Administration employees and air-traffic controllers will work without pay,” a policy that led to higher-than-usual absenteeism during the last shutdown, causing travel delays at airports.
• The 433 sites of the National Park Service are closed, but the public may continue to use “already accessible sites.”

Tax, trade and regs: The shutdown will not affect the implementation of President Trump’s tax cuts and  deregulatory agenda, the Treasury Department has said (POLITICO, subscription).  

• The administration has also ensured that its trade and immigration policies can largely continue unimpaired, either by designating the employees who work on them as essential or by making use of existing funding streams (POLITICO, subscription).
• In addition, U.S. Customs and Border Protection will continue collecting tariff revenues.

The NAM says: “A functioning government is essential for a strong manufacturing economy,” said NAM President and CEO Jay Timmons yesterday before the shutdown went into effect.

• “Manufacturers need certainty, not disruption. Our leaders in Washington must come together and keep the government open, so it continues working for the American people. From supply chains and permitting to regulatory certainty, product approvals and facility inspections, manufacturers rely on the government to do its job and provide the stability that drives growth.”