A report from the US Congress warned that a potential partial government shutdown, should lawmakers fail to reach a budget agreement, could cause up to $14 billion in economic losses. This comes amid concerns about direct impacts on federal employee pay and disruptions to public services across the country.
The Congressional Budget Office explained that the shutdown would slow economic growth in the final quarter of the year. This would occur as government spending decreased and some projects were halted, potentially impacting the labor market and consumer confidence.
The report noted that the previous US shutdown, which lasted more than a month, cost the economy approximately $11 billion. Of that amount, $3 billion has not been recovered even after the government reopened. It warned that a repeat of the current crisis would be even more costly given inflationary pressures and rising interest rates.
Analysts believe that political divisions within Congress between Republicans and Democrats increase the likelihood of a deadlock. This could deepen the crisis and affect the credit rating.
