We have long argued that, rather than trade policy, an extended Federal government shutdown would be the key downside risk to the economy this year. Sure enough, the current stand-off is already the longest on record and is prompting many forecasters to slash their estimates for first-quarter GDP growth. Even if it lasts through the whole quarter, we don’t think it would be the disaster for the economy that some are now claiming. But the costs will clearly continue to mount the longer the shutdown drags on.
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