Uncertainty follows government shutdown
Despite signs stating that the national parks are closed, people visit the World War II Memorial in Washington. The federal government shutdown may have seemed like a frustrating squabble in Washington, but it crept into our lives in small, subtle ways — from missed vegetable inspections to inaccessible federal websites. (Oct. 2, 2013) Credit: AP
After three weeks of political wrangling, the federal government is open and the debt ceiling has been increased. The good news/bad news is that there's a 90-day grace period before the next potential round of budget/debt ceiling debates. Now the fun begins: parsing the deluge of delayed economic reports and trying to figure out where the economy stands.
In the United States, the recovery was gaining momentum, until the two-headed monster of the government shutdown and debt-ceiling debate reared its ugly head. Moody's Analytics estimates that the whole fiasco cost $22 billion, and Standard & Poor's estimates the closure has shaved 0.6 percent from fourth quarter growth. As a result, the quarter that includes October, November, December should expand by only 2 percent, though analysts are hopeful the hit to growth will be a blip and 2014 will make up for the short-term damage.
That said, if congressional fighting recurs in January and February, there could be more "blips" on the radar screen. Additionally, if the next round of sequester cuts goes into effect, U.S. growth could be hampered in 2014.
