How a Government Shutdown Could Affect the Economy

Published On Dec 20, 2024, 4:36 PM

The article discusses the potential economic impact of a federal government shutdown, which appears likely unless Congress reaches a funding deal by the upcoming deadline. While the shutdown may not significantly disrupt the economy, as it will not affect essential government services like Social Security and Medicare, it could create uncertainty in the economic outlook. A temporary shutdown could reduce quarterly economic growth by around 0.15 percentage points for each week it lasts. While federal workers will eventually receive back pay, a prolonged shutdown could have serious financial implications for those living paycheck to paycheck.