US: Partial government shutdown - Rabobank

Analysts at Rabobank note that on Saturday, the US federal government closed down partially as President Trump refused to sign a spending bill that does not include funding for the border wall, while the Democrats have made clear that they will not vote for such a spending bill.

Key Quotes

“At this point in time it is difficult to give an exact assessment of the impact on GDP growth, because it will depend on the length of the government shutdown and on the implementation of the shutdown. Nevertheless, if we look at previous shutdowns and take into account that 75% of the federal government is still funded, in the worst case scenario we could see a slowdown in GDP growth of a few tenths of a percentage point in 2018Q4-2019Q1. That would only mean a minor dent in the current expansion.”

“The partial shutdown is not expected to affect the release of the Employment Report on January 4 by the Bureau of Labor Statistics. However, data published by the Commerce Department’s Census Bureau and the Bureau of Economic Analysis won’t be released on schedule.”

“The average government shutdown lasts 6-7 working days, but the longest shutdown (1995-1996) took 21 working days. However, the political dynamics will change when the new Congress starts on January 3 and the Democrats will have a majority in the House of Representatives.”