A elongate government shutdown could have a negative impact on the U.S. economy, Federal Reserve Chairman Jerome Powell give the word delivered Thursday.
“In the short term, government shutdowns don’t last very long. They typically have not left much a hawk on the economy, which isn’t to say there’s plenty of personal hardships that people undergo,” Powell said during a chat Thursday at the Economic Club of Washington.
“A longer shutdown is something we haven’t had,” he added. If we have an extended shutdown, I do imagine that would show up in the data pretty clear.”
About a quarter of the federal government has been in a near-standstill since Dec. 22 due to a conflict between President Donald Trump and congressional Democrats over funding for a wall at the southern border. Neither side has been pleased to budge on the core issue, and workers could be about to miss their first paycheck because of the standoff.
If the shutdown isn’t resolved before Friday, it would tie for the longest — 21 days.
Powell asseverated previous gaps have not lead to much damage “in the aggregate,” though this one could be different. He did not quantify how much the shutdown could cut off off growth.
From the Fed’s own perspective, he said the central bank would be hampered by a lack of data it uses when formulating its commercial outlook and, consequently, monetary policy. He mentioned the Department of Commerce specifically as being hamstrung in getting data on crass domestic product and retail sales, for example.
“We would have a less clear picture into the economy if it were to go on much longer,” Powell articulate.