J. Scott Applewhite/AP
The morning sun illuminates the U.S. Capitol in Washington, Monday, Sept. 30, 2013, as the government teeters on the brink of a partial shutdown at midnight unless Congress can reach an agreement on funding. Previous congressional actions have already cut the annualized growth rate for the quarter from 2.5 percent to 1.5 percent.

Short government shutdown? Small hit to economy. Long one? A recession.

A government shutdown would reduce GDP growth by an estimated 0.2 percentage points for every week it goes. Earlier congressional actions on the payroll tax expiration and the sequester have already weakened economic growth, as seen by the latest numbers.

Government shutdown: The economic impact of a shutdown of the federal government depends on how long it lasts. "It's not a disaster provided it doesn't go on a long time," says Nariman Behravesh, chief economist at IHS/Global Insight in Lexington, Mass. "For every one week that the government is closed, GDP growth in the fourth quarter will be reduced 0.2 percentage points." But if it goes on for three or four weeks, the effect on GDP (gross domestic product, which measures the nation's output of goods and services) would be big, Mark Zandi, Moody's Analytics chief economist, told a Senate committee last week. And if it lasts longer than two months, it would probably tip the economy into recession, he added.

The political fallout is so great that economists expect a quick resolution should the shutdown occur. Washington is already responsible for cutting annualized growth in the current quarter by a full percentage point because of the restoration of the federal payroll tax and the spending cuts under the budget sequester, says Mr. Behravesh. The result is that the economy is growing only weakly.

The latest numbers tell the story:

Consumer confidence down: The Conference Board’s monthly read of consumer confidence fell to 79.9 in September, revised downward from 81.8 in August. Meanwhile, the University of Michigan’s Consumer Confidence Index fell 4.6 points in September to its lowest monthly reading since April. “Unease over the budget and debt ceiling uncertainties emanating from Washington may have played some role in the decline in sentiment since the summer, although other factors, such as stock market gains and improvement in the housing market, likely continue to support a gradual upward trend,” Barclays Research economist Peter Newland wrote via e-mailed analysis.

Mixed data for housing: Home prices climbed 0.6 percent in July and 12.4 percent since July 2012, according to S&P/Case Shiller’s monthly index of home prices in 20 cities – the index’s biggest annual increase in 7-1/2 years. New home sales, meanwhile, jumped 7.9 percent in August. But pending home sales fell by 1.6 percent in August, suggesting to some analysts that existing home sales could drop in September.

Mortgage rates sliding: The average rate for a 30-year fixed rate mortgage fell to 4.47 percent since last week, and the purchase application volume increased by 7 percent. Rates are falling in the wake of the Federal Reserve’s announcement that it wouldn’t scale back its asset purchases. The mortgage market had already anticipated the start of the taper, causing rates to rise through the summer.

Jobless claims plunge. Initial filings for unemployment benefits fell to an unexpected 305,000 last week, down 367,000 from a year ago and the lowest level in over six years. Economists are hopeful that the continuing downward trend in jobless claims could  mean a more robust recovery for the rest of the labor market. But some are skeptical. “The reported result of was much lower than generally anticipated,” MFR Inc. economist Joshua Shapiro wrote in his e-mailed analysis of the numbers. “Possible explanations include that businesses are laying off fewer workers but hiring also remains sub-par, that the claims data will rebound, or that the labor market really is considerably better than most other data would indicate. Time will tell what the answer is, but our belief is that the claims data should not be taken at face value as they are inconsistent with too much other evidence.”

McDonald’s going healthy? Fast food giant McDonald’s announced Thursday that it would no longer be marketing some of its least healthy items to children, and that it would start to offer fruit and vegetable options for some of its adult menu items, including salad as a side choice in its value menus. The announcement, made in conjunction with the Clinton Foundation’s Alliance For A Healthier Generation campaign against childhood obesity, comes as fast-food chains are facing social and commercial pressures to make their menus healthier. The Center for Science in the Public Interest faintly applauded the move, releasing a statement that "McDonald's slow march toward healthier meals made a major advance today, but a long road lies ahead for the company."

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Short government shutdown? Small hit to economy. Long one? A recession.
Read this article in
QR Code to Subscription page
Start your subscription today