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Shutdown, Debt Ceiling And The U.S. Economy

With a government shutdown and the debt ceiling up next, we look at how the U.S. economy may react to a season of political upheaval.

Trader Robert McQuade works on the floor of the New York Stock Exchange Wednesday, Sept. 25, 2013. Investors continue to worry about the economy and the growing possibility of a government shutdown. (AP)

Trader Robert McQuade works on the floor of the New York Stock Exchange Wednesday, Sept. 25, 2013. Investors continue to worry about the economy and the growing possibility of a government shutdown. (AP)

After years of recession and struggle, the narrative of the US economy was just perking up lately.  Good fundamentals, we’ve heard.  If we just play our cards right, this country’s economy could rock again.  And then comes Washington’s shutdown blow-out.  Lights out for half the federal government.  The nation’s debt-ceiling and credit rating back on the line.  The United States seen as roaring off the rails.  And the economic impact?  Not good.  Even the conservative US Chamber of Commerce is begging Congress to cut it out.  Up next On Point:  shutdown, crisis, and the US economy.

– Tom Ashbrook

Guests

Nancy Cordes, Congressional correspondent for CBS News. (@NancyCordes)

Trish Regan, anchor on Bloomberg Television and host of Bloomberg’s daily business program “Street Smart.” (@trish_regan)

Justin Wolfers, senior fellow at the Brookings Institution. On leave from the University of Michigan’s School of Public Policy, where he teaches economics and public policy. (@justinwolfers)

Diane Swonk, chief economist at Mesirow Financial, a Chicago-based financial services firm. (@dianeswonk)

Steve Stevens, President and CEO of the Northern Kentucky Chamber of Commerce. (@nkychamberprez)

From Tom’s Reading List

Bloomberg News: Shutdown Will Cost U.S. Economy $300 Million a Day, IHS Says — “A partial shutdown of the federal government will cost the U.S. at least $300 million a day in lost economic output at the start, according to IHS Inc. While that is a small fraction of the country’s $15.7 trillion economy, the daily impact of a shutdown is likely to accelerate if it continues as it depresses confidence and spending by businesses and consumers.”

Politico: Government shutdown would threaten fragile economy — “If a shutdown drags on longer than a couple of weeks, pushing close to the Oct. 17 deadline for raising the debt ceiling, it could be far more damaging, possibly even driving an already slow-growing economy back into recession. Combine a shutdown with a default or near-default, and the sluggish economy would almost certainly stall out.”

The Washington Post: Danger to economy worries experts weighing potential government shutdown, default — “A shutdown of a few days might do little damage, but economists, lawmakers and analysts are increasingly bracing for a shutdown that could last a week or more, given the distance between Republicans and Democrats. Such an outcome would suck money out of the economy and spread anxiety among consumers and businesses in a way that is likely to hold back economic activity.”

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