economy, unemployment

The government shutdown: 800,000 more people out of work

I’m sure most of you are tired of reading about the government shutdown. Thanks to House ‘leadership’ not being able to agree on a spending deal by the end of the fiscal year (Sept 30), Federal government services deemed nonessential were ordered to shut down on October 1. We’re now entering the second week of the shutdown. About 36% of Federal employees have been furloughed.


So why am I talking about it? Because the shutdown has put more than 800,000 people out of work. Those government employees are eligible for unemployment benefits. That’s essentially the same number of people out of work as in January 2009, when the U.S. lost 818,000 jobs in one month. That was the height of the Great Recession. 

What’s worse is the potential impact to the economy. Those 800,000 furloughed Federal employees will reduce spending by an estimated $155 Million per day during the furlough period. Initial estimates is the U.S. economy will lose 0.2% of GDP in the fourth quarter for every week the Federal government is shut down. A longer shutdown could take the GDP loss as high as 1.4%.

It’s possible that our listing economic ship could be righted somewhat by the House voting to grant back pay to furloughed workers this past weekend. It’s difficult to say if that said workers will feel comfortable enough to start spending without Congress having funded the government for fiscal 2014, however. And there remains a longer term concern about how this might impact the continuing economic recovery. Will major employers feel confident in making continued investments in their business that result in more hiring?

Right now, we’re all forced to wait and see how big of an impact this may have on the economic recovery–and how it may impact job growth in 2014. Recent job growth numbers have been positive, but not strongly so. Fourth quarter is often a bit soft for job growth outside of seasonal (temporary) labor, so this comes at an especially difficult time. (The last government shutdown occurred in Q2, not Q4.)

My recommendation? Write your Congressperson. Tell them that you want to see them do their job, find a way forward to fund the US Government, and help the economy continue its recovery–putting more people back to work.



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