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Shutdown could slam frail U.S. economy

Tuesday, Oct 01, 2013 - 02:13

Oct. 1 - The government shutdown hits a fragile U.S. economy, taking away not only government jobs that contribute to economic growth, but also many of the tools used to determine monetary policy. Bobbi Rebell reports.

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The bitter blame game continued with the still employed politicians in DC- while as many as a million workers were sent home on Tuesday- out of work and out of luck. President Obama expressed frustration: SOUNDBITE: U.S. PRESIDENT BARACK OBAMA (ENGLISH) SAYING: "I'm not going to allow anybody to drag the good name of the United States of America through the mud just to refight a settled election or extract ideological demands. Nobody gets to hurt our economy and millions of hard-working families over a law you don't like." Landmarks like the Statue of Liberty took a hit- as will the businesses in the area that depend on tourists. According to Goldman Sachs, a week-long shutdown will slow U.S. economic growth by 0.3 of a percent. Qorvis National Director of Financial Communications Stan Collender: SOUNDBITE: STAN COLLENDER, NATIONAL DIRECTOR OF FINANCIAL COMMUNICATIONS, QORVIS (ENGLISH) SAYING: "It is pretty serious in the sense that it represents one of the true stalemates in American politics probably in our history. Is it going to destroy the economy? Well not if it doesn't last too long. If it goes on for a while like in a month or two it will do two things: one it will seriously reduce economic output. Don't forget the Federal Government is 21% of the GDP. But it will also reduce confidence in the U.S.'s political system's ability to deal with economic issues." And to deal with economic issues, policy makers, like the Fed, need the data to make decisions. Data- like the monthly jobs report- that won't be released on time because agencies, like the Bureau of Labor Statistics are shut down. PIMCO's Tony Crescenzi: SOUNDBITE: TONY CRESCENZI, PORTFOLIO MANAGER, PIMCO (ENGLISH) SAYING: "It is disruptive. Remember we do have a fragile economy and the Fed is in a mode where it is data dependent which is to say, it wants to see data. But if it's not going to get those data then how can it make decisions and how can the markets then make decisions about what is next for interest rates, and so it is quite disruptive, because we are in a very sensitive time regarding the Fed and its data dependency." One possible economic upside- Crescenzi and a number of other analysts say the backlash from this shutdown will likely exhaust politicians' will for another acrimonious fight when it comes to raising the debt ceiling later this month, an even more critical issue.

Shutdown could slam frail U.S. economy

Tuesday, Oct 01, 2013 - 02:13

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