Government shutdown odds are rising. Economic experts aren’t panicking (yet).

Published On Dec 19, 2024, 8:33 AM

The likelihood of a U.S. government shutdown has increased following a breakdown in negotiations on a new spending deal, primarily due to opposition from key figures like Elon Musk and Donald Trump. Economic experts, including Goldman Sachs analysts, believe that while a shutdown could reduce GDP growth temporarily, its overall impact may be limited and recovery could follow after reopening. The article emphasizes that credit rating agencies will closely monitor the situation, which could affect the U.S. government's financial standing. Analysts suggest that a prolonged shutdown seems unlikely, but a clean continuing resolution could help avert it.

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The deteriorating political environment, marked by divisions within Congress and economic uncertainty, raises risk factors for investors. However, the expected limited economic impact due to potential quick recoveries may alleviate some immediate fears in the market.

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