So what would a US government shutdown actually do to the economy

Jay Soloff
Jay Soloff Argonath Financial

So what would a US government shutdown actually do to the economy? On October 17th, the US Treasury will reach its debt ceiling and no longer be able to pay its bills. Because the government will no longer be able to borrow (print) money, several federal offices will have to be temporarily closed. This will allow vital government functions to stay open. However, effects of a closure would be severely negative for the economy. Most importantly, about $600 billion in cuts (annualized) will need to be made. That's primarily money paid to government workers and contractors - money which won't be injected into the economy. An amount that large could have disastrous impacts on the already slow economic recovery in the US. Moreover, it could delay interest payments on US debt or cause ratings agencies to downgrade the country's credit rating.

debt ceiling usa government shutdown

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