GDP to decrease by 0.3% each week of US shutdown: S&P

The US Treasury Department to hit the debt ceiling on October 17, and the shutdown and looming debt ceiling risk significant blow to business and consumer sentiment.

GDP to decrease by 0.3% each week of US shutdown: S&P

World Bulletin/News Desk

The Gross domestic product (GDP) of the United States will decrease by 0.3% each week of the government shutdown, Standard & Poor's (S&P) announced Wednesday. 

The report said the shutdown would only add to the concerns of markets which are already jittery about American currency's possible selective default.

The Treasury Department would hit the debt ceiling on October 17, the statement reminded, noting that the combination of the shutdown and the looming debt ceiling could significantly hurt business and consumer sentiment, as well as the economy.

The international credit rating agency's Ratings Services recently published a report on the effects of the shutdown on the US economy, based on experience from the almost four week back-to-back shutdowns during the Clinton Administration in 1995-1996.   

Adding that businesses did not want to invest during periods of uncertainty while households would likely delay spending, the report said the impact on the economy could be even more severe if debt-ceiling negotiations were not agreed on.

"Finally, economists, including here at Standard & Poor's and at the Federal Reserve, will no longer have government economic reports, such as the Bureau of Labor Statistics' jobs figures, that are needed to understand what's going on in the US economy," the report said.

"The Fed is in a bind, given their view that monetary policy is now 'data-driven' -- particularly jobs data. While we have long factored in a shutdown, which is part of the reason for our June call that the Fed's scaling back of its bond purchases would begin in December, the length of time that the central bank is without data could add more uncertainty to the Fed's decision that an economic recovery is making process and push out the start of the tapering."

Last Mod: 09 Ekim 2013, 13:10
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