Economy

Gov’t Shutdown May Have Cost The US $6B

Gov’t Shutdown May Have Cost the US $6B

The partial shutdown of the U.S. federal government – which lasted 35 days, the longest in modern history – cost the U.S. economy $6 billion, Reuters reported.

According to the report, citing S&P Global Ratings, the $6 billion was lost in terms of productivity from workers who were furloughed and the economic activity that outside businesses lost as a result. “Although this shutdown has ended, little agreement on Capitol Hill will likely weigh on business confidence and financial market sentiments,” S&P said in a news release.

Late last week, President Donald Trump ended the government shutdown to give lawmakers more time to negotiate on the wall he wants to be built on the southern border. The president failed to get the $5.6 billion in funding he was seeking to fund the wall.

S&P Global Ratings isn't the only market research firm that is warning of the impact the shutdown will have on the U.S. economy. The financial firm PIMCO said last week that its previous forecast for real GDP growth in the U.S. has been lowered to 0.5 percent for the first quarter, lower than the 3 percent growth the U.S. economy saw in 2018. The shutdown on its own wasn't the culprit, but combined with other near-term issues, it could put first-quarter growth in trouble, PIMCO warned. The shutdown also hurt the initial public offering (IPO) market with a halt in the Securities and Exchange Commission (SEC) approving public offerings. That is expected to result in a backlog when business returns to normal.

At the same time that the government shutdown hurt the economy and small businesses that cater to federal workers, payday lenders and pawn shops were able to benefit. With workers missing two paychecks and uncertain as to when they will get their back pay, pawn shops and payday lenders are doing brisk business. Since the shutdown, shares of publicly traded pawn shop companies and payday lenders have jumped.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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