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Could the US government shutdown cause a recession?
While past shutdowns have had limited long-term effects on the US economy, the current shutdown is riskier due to the scale of disruptions and the lack of pre-funded agencies. Economists warn that prolonged shutdowns could slow economic growth and increase recession risks if they persist.
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What are the main political issues behind the shutdown?
The shutdown stems from a political impasse over funding, with disagreements over healthcare, social programs, and tax cuts for the wealthy. Democrats oppose the budget bill passed without their support, leading to a deadlock that has halted government operations.
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How might this shutdown affect Federal Reserve decisions?
The delay in economic data due to the shutdown complicates the Federal Reserve's decision-making process on interest rates. Uncertainty about economic growth and inflation could lead the Fed to adopt a cautious approach until more data becomes available.
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What are experts saying about the US economy now?
Economists like Ed Yardeni suggest that markets are complacent despite political tensions, but warn that prolonged shutdowns could have serious economic consequences. Analysts are closely monitoring the situation for signs of a slowdown or recession.
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How are federal workers and the economy affected?
Hundreds of thousands of federal employees face furloughs and job insecurity, which impacts their families and local economies. The disruption also delays economic data and key government services, adding to economic uncertainty.
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Could this shutdown impact US-China trade talks?
International markets and trade negotiations could be affected if the shutdown delays economic data or causes market volatility. This could complicate ongoing US-China trade discussions and global economic stability.