Shutdown Felt

Economy Watch: Too Soon to Gauge Shut Down Impact

Day One of the federal government shutdown, 2013 version, passed without too much incident on Tuesday. As expected, certain functions of the U.S. government came to a halt. Also as expected, Congress didn’t act to resolve the situation.

“The most significant immediate term impact of the government shutdown is whether it rattles households and businesses by impacting uncertainty and confidence,” Research Chief Economist Peter Muoio tells MHN. “With the shutdown only several hours old, it’s too early to tell. So far the financial markets haven’t reacted wildly, which would get everyone’s attention.”

“All that said, the primary potential transmission mechanism is through uncertainty.” Muoio continues. “So far this year, the decreased levels of uncertainty have supported stronger economic growth and, therefore, demand for both residential and commercial real estate. We must gauge the shutdown’s impact on uncertainty and stress that a quick solution would clearly have less impact than a prolonged fight.”

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