GOP Shutdown: Economic Indicators Show Concern

Now in its third week, the economy is showing increasing signs of strain over the continuing Republican government shutdown. According to CQ:

“Two weeks into the government shutdown, signs that the result of a congressional standoff is starting to take a bite out of the economy are growing.”

Economic growth projections are being scaled back, federal contractors are starting to lose their jobs, consumer confidence is plummeting ahead of the crucial holiday shopping season and the stock market has been engaged in a long, slow slide.”

“According to a report by Macroeconomic Advisers, the two-week shutdown has reduced Gross Domestic Product by a quarter of a percentage point this quarter. Each additional week of the shutdown will cut another 0.1 percent in GDP.”

The shutdown has also started costing jobs, the report said. Initial jobless claims rose by 66,000 last week, according to the Department of Labor. Although much of that increase can be attributed to a change in reporting methods in California, about a quarter of the increase in new claims is due to private-sector workers being laid off due to the shutdown. The effect of the shutdown on unemployment claims by federal employees will be calculated separately.”

“The rise ‘does indicate that the shutdown has begun to produce layoffs in the private sector, as firms with government contracts are forced to curtail operations,’ said a Macroeconomic Advisers report.”

An economic consumer confidence index measured by Gallup fell to the lowest point in almost two years last week, driven both by the shutdown and by the specter of breaching the debt ceiling. Also last week, Reuters reported the consumer sentiment index it calculates with the University of Michigan had dropped to its lowest level since January.”

Meanwhile, the Dow Jones Industrial Average dropped 900 points between Sept. 18 and Oct. 8 on fears of a shutdown. The average has rebounded somewhat in recent days after President Barack Obama’s nomination of Janet L. Yellen to head the Federal Reserve and after news emerged that lawmakers were working on a deal.”

Retailers are starting to worry that the shutdown could jeopardize the holiday spending season, which accounts for roughly 20 percent of the retail industry’s annual sales, according to the National Retail Federation. This year, the group expects the holiday season to generate $602.1 billion in sales.”

Instead of hurting our economy and creating greater uncertainty, House Republican should work with Democrats to  reopen the government and ensure America can pay its bills.