With a government shut down beginning its unpredictable path, one thing is for certain: US economic sustainability faces severe testing. Losing at the tune of $300 million daily, it remains to be seen whether the US economy and its up to now failed administrative policies can withstand further erosion of public confidence and resiliency.
Deja Vu:
Up to now, as viewed by many observers, there exists a governmental administration perceived as ineffective and void of any economic strategy. If anything like the 1995-1996 closing of government, businesses typically cut back on spending projects and the national growth rate either comes to a screeching halt or slows down to a trickle.
However, due to the fear of a fast approaching Obamacare train-wreck, other areas rapidly become subject to a domino-effect in economic stressing.
Wall Street
Wall Street no doubt began the free-fall as it already closed last Friday with the 10 major industries in the S&P dropping sharply: consumer goods, oil, gas and financial shares suffering the most.
Government Furloughs
Further fears produced by the government shut down translates into an estimated 800,000 to 1 million civilian government workers being suddenly furloughed. Any prolongation of a shut down only serves to increase the perception in federal employees of not getting back to work anytime soon.
Consumer Confidence
The US being a consumer-driven economy already faces challenges in this area. As things stand, consumer spending makes up more than 70 percent of the economy and the first thing consumers usually do is cut back on the spending. A shut down coming so close before the Christmas holiday season could prove catastrophic for the nation.
US Treasury
Adding fuel to the fire, is the reality that recent statements by the US Treasury reveal there are billions less available funds in the nation’s depositories than previously thought. This fact and the other looming monster of Congressional failure to raise the debt ceiling even further, sets the stage of what could be an economic disaster of Biblical proportions.
