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EconoMeter: Government shutdown might hurt

Pain would be temporary but could harm faith in U.S. dollar


Sunday, March 6, 2011

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Kelly Cunningham, National University System
If the shutdown lasts only a short time, modest economic fallout would occur and be quickly made up. But if it drags on, much greater impacts will result from shaken consumer confidence and disrupted spending. Stock markets could be shaken and businesses stop hiring. The housing market, for example, could be hampered as the FHA, which insures mortgages, delays processing home loans. Goldman Sachs estimates each week the federal government is closed, federal spending would be reduced around $8 billion, and real GDP growth slowed by as much as 0.8 percentage points at an annual rate for the quarter.