US government enters shutdown which will likely delay economic data release
Make us a preferred source
Make us a preferred source on Google
The news: The US federal government has entered a shutdown after senators failed to back funding legislation ahead of a scheduled expiration date, putting a halt to non-essential services and likely delaying the release of economic data.
The US government entered a shutdown just after midnight (US Eastern time) on 1 October and will remain shuttered until new funding is agreed to.
The numbers: The US congressional budget office (CBO) estimates that 750,000 government employees could be furloughed, which would generate an estimated daily compensation bill of USD400 million ($606.59 million).
While the total cost and wider economic impact is uncertain, a five-week partial shutdown during US President Donald Trump’s first term led to a USD3 billion unrecoverable hit to annual gross domestic product, or 0.02% of the 2019 level, according to CBO estimates.
The context: On 30 September, neither a Republican stop-gap continuing resolution to maintain government funding levels at its existing levels to 21 November nor a counter proposal drafted by Democrats achieved the threshold voting support of 60 senators.
Democrats stressed that any agreement needed to extend support for health insurance subsidies that are due to expire at the end of the year.
Essential staff such as active duty military personnel and law enforcement will continue to work without pay. Mail services, Amtrak and air traffic controllers, among others, are also expected to keep working.
Medical research as well as national parks, monuments and museums are expected to partially close while economic data collection, small business loans and visitors centres are expected to be mostly closed.
This is expected to delay the release of the Bureau of Labor Statistics payroll and employment change data for September, which was scheduled for release on Friday.
Members of congress will continue to receive pay as this is considered mandatory spending under the US constitution and is not subject to the funding lapse.
Trump has threatened to permanently fire swathes of ‘non-essential’ workers under the shutdown. The White House budget office issued a memo to federal agencies last week that told them to prepare ‘reduction in force’ plans to cut permanent staffing levels during the shutdown period.
