The Potential Impact of a Government Shutdown on the US Economy
Treasury Secretary Janet Yellen has issued a warning about the potential damage that a government shutdown could have on the US economy. She expresses concerns about the immediate and long-term consequences, including the possibility of pushing the nation into a recession.
The Fear of Recession
Yellen considers a government shutdown to be reckless and emphasizes the immediate harm it could cause. Economic experts and policymakers share her concerns, believing that this poses a significant risk to the economy. The psychological impact of political paralysis on businesses and consumers is also highlighted, as it can erode confidence and lead to reduced spending and investment.
In preparation for a potential shutdown, the Treasury Department has started making arrangements for furloughing department workers. The duration of the shutdown will determine the extent of its economic repercussions, with estimates suggesting that it could reduce quarterly growth by 0.1 to 0.2 percentage points every week.
Unique Challenges and Partisan Gridlock
Yellen points to a small group of extreme Republicans in the House of Representatives as the source of gridlock and damage to the economy. This ongoing political standoff increases uncertainty surrounding the impending shutdown.
Hot Take: Bitcoin’s Bullish Resurgence Amidst Political Uncertainty
While the US government faces the risk of a shutdown, Bitcoin (BTC) has experienced signs of a bullish resurgence after a period of relative stability throughout September 2023. In an unexpected turn of events, BTC recorded a 1.5% increase on Friday.
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