It's Thursday night, which means the next time you hear from this humble newsletter, the United States government may be shut down.
While that's hardly the end of the world, it is certainly an annoyance —especially if you're one of the 4 million federal employees who are facing the prospect of an indeterminable period without a paycheck.
And the timing could not be worse for the US economy.
To be clear: The economy is in pretty good shape — better, certainly, than anyone would have predicted after 11 straight interest rate hikes in just over a year. The long-rumored recession has not arrived. The job market is strong. Inflation is coming down.
But never underestimate the power of Congress to take a good thing and destroy it over partisan showmanship.
As resilient as the economy has been, the effects of the pandemic are still reverberating, leaving plenty of potential pitfalls, my colleague Matt Egan writes.
For every bright spot in the economy, there's also an imminent hazard.
- Inflation is cooling, and that's good. But oil prices are racing toward $100 a barrel, threatening to undo some of that progress.
- Consumer spending has proven resilient throughout the turmoil of the pandemic and high inflation. But consumers are beginning to pull back — a trend that will only accelerate once student loan payments come due in October, after a three-year hiatus.
- Gross domestic product, similarly, has outperformed expectations. But several wild cards — an indeterminable government shutdown, auto worker strikes, unpredictable gas prices — that could take a toll on growth.
- Key quote: "It was already a perfect storm. And now there's a potential government shutdown," said Greg Valliere, chief US policy strategist at AGF Investments.
It isn't only civilian federal employees who could see their paychecks put on pause. Active-duty military would be required to work, but they would not get paid until the government reopens. (There's about $4 billion in paychecks due to be sent out on October 13 to active-duty service members, according to Goldman Sachs.)
Anyone flying in the near-term had better brace for turbulence, because if a shutdown drags on, air traffic controllers and TSA workers won't get paid, and many will call out sick while they try to find side gigs to pay the bills.
The US Travel Association estimates the domestic travel economy would lose as much as $140 million a day from a government shutdown.
A less tangible but still significant problem: Official data on the state of the labor market and inflation won't be released, leaving Fed policy makers and investors flying blind.
Annnnd in case you missed it, Wall Street is particularly on edge right now. Those guys loathe uncertainty, and have been known to throw a fit when they're caught off guard.
Bottom line: With only three days to go before government funding expires, House Republican infighting has been on full, honestly embarrassing display.
The Senate has put together a bipartisan proposal to avert a shutdown. But House Republicans have thrown cold water on that plan, leaving the two chambers at an impasse
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