Outside of federal workers, the economic ripple effects of a shutdown may be less noticeable, economics experts say. (Scripps News)
Thousands of federal workers are receiving smaller paychecks on Friday due to the government shutdown. And for many, it could be their last check until Congress agrees to reopen the government.
“Federal workers serve in every single one of our communities around this country and the people that are not getting paychecks are not paying their payroll bill, said Sara Nelson, president of the International Association of Flight Attendants. “They’re not going to be able to pay their rent. They are not going to be able to pay for the other services and that is going to have a ripple effect on all of us.”
But outside of federal workers, the economic ripple effects of a shutdown may be less noticeable, according to economics professor Abby Hall.
“If this shutdown is relatively short, I don’t imagine that for many people, they will notice a particularly large difference,” Hall said.
During the last shutdown which ended in 2019, the Congressional Budget Office found just two hundredths of a percent was shaved off the U.S. GDP, a measure of economic activity.
That limited impact is because when the government reopens from a shutdown, federal workers should collect back pay and spending continues.
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“A government shutdown, think of it like a hurricane,” financial analyst Andrew Davis said. “The initial storm comes through and disrupts economic activity, and then once the storm passes, you see a snapback.”
Despite the shutdown, consumers could still get new data on inflation later this month. According to multiple reports, the Bureau of Labor Statistics is tasking some employees with putting out the monthly consumer inflation report.
Davis formerly worked as an economist at the bureau.
“That CPI report goes directly into a cost of living adjustment, which is the emphasis of getting that out,” he said.
Those figures ultimately impact Social Security benefit payouts.
