Sunday, September 27, 2015

A few comments on Possible Government Shutdown

by Bill McBride on 9/27/2015 12:43:00 PM

There are two possible imminent government shutdowns by Congress. The first is related to a budget for the next fiscal year (starts October 1st) and the second is related to the so-called "debt ceiling" (really a question of paying the bills).

It is possible there will be a shutdown Wednesday evening due to disagreements on the budget. This will not have serious economic consequences, but it will have a negative impact on the economy, including (there would be much more) ...

Shutdowns cost money (there are no savings; shutdowns are fiscally irresponsible).

• A number of services will be shutdown (as example, there will be a negative impact on mortgage applications and the National Parks will close).

• Several economic releases will be delayed. First up will be the September employment report scheduled for Friday. Depending on how long the shutdown lasts, other reports that could be delayed include CPI, housing starts, new home sales, trade deficit and much more.

A more serious issue will be if Congress doesn't agree to "pay the bills".  The so-called "debt ceiling" will probably be reached in November, and failure to pay the bills would have serious economic consequences (that would start slow and build over time).  It would be absolutely irresponsible to not pay the bills.

Hopefully there will be no shutdowns this year.