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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsEconomist: If government shutdown lasts into next week, investors may start to panic
It's too early for the government shutdown to have much impact on the economy, but if it continues into next week with no end in sight, there could be a big selloff in the stock market.
That's the outlook from Mark Zandi, chief economist at Moody's Analytics. Zandi spoke to reporters Wednesday morning about ADP's new jobs report, which he helped produce. ADP found that 166,000 private-sector jobs were created in September, consistent with the soft job growth the economy has experienced in recent months.
The government shutdown didn't begin until Oct. 1, so that had no impact on September's jobs numbers. But the spending cuts and tax increases that went into effect this year have slowed the economy, Zandi said. Plus the increase in political uncertainty in recent years -- over regulatory policy as well as fiscal brinksmanship -- has cost the economy more than 1 million jobs, he said.
As for the government shutdown, it will "probably not do meaningful damage until it starts to unnerve stock and bond investors," Zandi said.
If there's no imminent agreement to fund the government by next week, investors may begin to doubt that a deal to raise the government's debt ceiling will be reached the mid-October deadline, he said. That could prompt a big selloff in financial markets, he said.
A financial panic could "be the catalyst for generating the political will" to end these fiscal standoffs, Zandi said.
http://www.bizjournals.com/seattle/news/news-wire/2013/10/02/economist-if-government-shutdown.html
quinnox
(20,600 posts)the longer this goes on, the more it will hurt people. I know someone who is personally affected, and he isn't happy.
DCBob
(24,689 posts)It will get ugly.
leveymg
(36,418 posts)What Lola wants . . .