The US Government Shutdown Isn’t the Problem. Public Debt Is

The US Government Shutdown Isn’t the Problem. Public Debt Is
The U.S. Capitol building, in Washington, on July 12, 2023. Jemal Countess/Getty Images
Daniel Lacalle
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Commentary

There are hundreds of headlines all over the news warning of the negative effects of a government shutdown. The negative effect on gross domestic product, according to Bloomberg, is estimated at 0.5 percent of the quarterly annualized rate if the shutdown lasts for two weeks. Clearly, that’s an annualized rate, not the overall hit. The most recent government shutdown lasted from Dec. 22, 2018, to Jan. 20, 2019, and the U.S. economy still grew at a 2.2 percent rate.

Daniel Lacalle
Daniel Lacalle
Author
Daniel Lacalle, Ph.D., is chief economist at hedge fund Tressis and author of the bestselling books “Freedom or Equality” (2020), “Escape from the Central Bank Trap” (2017), “The Energy World Is Flat”​ (2015), and “Life in the Financial Markets.”
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