President Trump gave a national address last night pointing to a “humanitarian and security crisis” on the southern border and demanded billions of dollars in Congressional funding for a wall, which would be “indirectly paid for” via a trade deal with Mexico. An extended shutdown can affect the economy in a number of ways – from delaying business permits and visas to reducing service hours at innumerable agencies. Withheld or forgone pay from millions of federal employees can also hit consumer spending, which makes up about 70% of U.S. economic activity .
The shutdown also has the sovereign credit rating of the U.S. on watch. “If this continues to March 1 and the debt ceiling becomes a problem several months later, we may need to start thinking about the policy framework, the inability to pass a budget… and whether all of that is consistent with triple-A,” said James McCormack, Fitch’s global head of sovereign ratings.