The Impact and Implications of the US Shutdown: What You Need to Know

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Prepare for the upcoming US government shutdown with Goldman Sachs’ latest report.

According to Goldman Sachs, there is now a 90% chance that the shutdown will begin this Sunday. If you want to know more about the implications, Goldman Sachs has published a report on the matter. Here are the key points:

– A government shutdown has been predicted for months, and the odds have now increased to 90%. The most likely start date is October 1. While there is still a chance of a last-minute funding extension, there has been little progress and time is running out. If a short-term extension is passed, a shutdown is still expected in Q4.

– The shutdown is expected to last 2-3 weeks. Quick reopening is unlikely as political positions become more entrenched. Pressure to reopen the government is likely to build gradually, especially with military pay dates approaching and potential disruptions in “essential” operations.

– The shutdown would have a negative impact on Q4 GDP growth, estimated at 0.2pp per week. Federal employee furloughs would subtract 0.15pp per week, and there would be an indirect private sector hit of 0.05pp per week. Data releases from federal agencies will be postponed until after the shutdown, except for those from the Federal Reserve.

– It is possible that there may be more than one shutdown. The two parties have significant differences in spending proposals, and any agreement to reopen the government may expire before the year-end, potentially leading to another funding lapse.

If you find the idea of “more than one shutdown is possible” frustrating, you’re not alone. For more information on the US debt ceiling and its impact, you can access Goldman Sachs’ comprehensive Q&A report here.