US economy enters uncharted territory

WASHINGTON, D.C.: The US government shutdown on Saturday became the longest in history and is taking a growing bite out of the world’s largest economy with each passing day, economists say.

While most of the 21 “lapses” in

left barely a scratch on economic growth, the length of this shutdown makes it harder to say just how bad the impact could get.

“It’s not a hard stretch to say that initially it’s smaller and then it expands, the pain starts to widen,” Beth Ann Bovino, chief US

effect.”

With about a quarter of the federal workforce affected, the shutdown is currently squeezing an estimated $1.2 billion a week out of the economy, Bovino said, but that figure could grow if it drags on.

At the current rate, within two weeks it will have cost America more than the $ 5.7 billion US President Donald Trump is demanding for a wall on the border

Congress that led to the failure to pass funding for government operations.

Following extended closures in 1995 and 2013, the US economy continued to grow while stock markets mainly went sideways.

And GDP growth lost in one quarter can rebound in the next as the government springs back to life and workers recoup lost salaries. But some losses can never be recovered.

In myriad but often unseen

is felt in the daily lives of all Americans, well beyond the 800,000 government workers now going without pay -- many of whom missed their first paychecks on Friday.

Switching off even a part of the government means that life force quickly begins to bleed away.

Payments to farmers and poor families, craft beer labels, food inspections and economic data all have fallen victim to the budget impasse.

Hurting the poorest most

- to the mortgage industry were

at stake.

“The tentacles start to touch many avenues of life and that’s a very sad thing,” Bovino said.

US Coast Guard cutters, their crews working without pay, on

commercial ports in the frigid waters of Great Lakes near the Canadian border so local steel mills can remain supplied with iron ore.

- lect aid payments designed to help ease the pain caused by Trump’s trade war with China. Small Business Administration

focus on lowering bank reserve requirements.

“We expect the BSP to cut the RRR (reserve requirement ratio) by 300 basis points in 2019, with the loans to help mom-and-pop businesses trying to invest, hire and grow have been delayed.

There are no government loans for seeds or cattle feed and none of the regular Agriculture Department data about crop yields and commodity prices that farmers depend on to plan for the coming year.

Permits from some oil and gas drilling — which feeds into GDP calculations — are delayed.

Bloomberg estimates that government contractors are losing $200 million a day, cutting revenues for defense industry giants like Boeing, General Dynamics and Leidos.

national parks normally generates a reported $18 million a day, but with some parks unattended and many services halted, local restaurants, hotels and shops are losing customers.

Government assistance to feed the poorest Americans is funded through next month only.

None of this includes the hardships felt by the 380,000 federal workers who have been fur-

deemed “essential” but are working without pay.

million a month in rent and mortgage payments, according to the

Around the Washington region, home to about 20 percent of the federal work force, restaurants are sitting empty, taxis are idled and

- rie ease along the capital’s choked boulevards.

Yingrui Huang, an engineer for a defense contractor at NASA’s Goddard Space Flight Center in

normally at work building weather satellites and telescopes for the government but is shuttered until further notice.

To fight boredom, he is now driving for the mobile ride hailing service Lyft but said he was most concerned hourly employees like janitors, cafeteria workers and secretaries.

“Their salaries are definitely lower than most of the engineering staff. They don’t get the limelight. We don’t think about them,” he said.

Economic research on the last major shutdown in October 2013 found many federal workers were largely able to avoid sinking into debt -- delaying mortgage payments and shifting balances between credit cards.

But that shutdown lasted for barely two weeks -- one pay cycle -- and lawmakers at the time had quickly promised workers would receive back pay.

“It’s possible that the effects will be greater for this shutdown,” University of Chicago economist Constantine Yannelis, who studied the 2013 shutdown, told AFP.

“The longer a shutdown lasts, the more persistent a change in habits you could see.”

The RRR is the proportion of current deposits that banks need to keep with the central bank against the sum they can loan out to borrowers.

One-percentage-point cuts to the ratio, currently at 18 percent, were