Partial US government shutdown enters first week
As anticipated, a new partial shutdown of the federal government began Oct. 1, as the deadline for negotiations between Democrats and Republicans to approve a budget allocation expired. It is the first in seven years, and the second under the Trump administration.
The last shutdown was in 2018-2019, lasting 36 days. Between 1976 and 2019, there have been 21 partial shutdowns of the federal government. This time, the partial shutdown affects nonessential services, but if it continues, it will have greater consequences.
Among its effects or impacts are the following:
1. Since this is a partial closure, some employees will continue working but without pay. Those who choose to stay or are retained will not be paid. When service resumes, they will receive back pay. It is estimated that about 40% of the total federal employees, or 750,000, will be temporarily out.
2. Severe suspensions of essential services, such as aviation, are not expected, but they will be affected. Air traffic controllers are considered essential but will not receive pay in the meantime. TSA passenger processing at airports will also be affected. Additionally, services such as Social Security, Medicare, Medicaid, passports and customer service at the IRS and other federal agencies will be affected. Pension payments will not be postponed.
3. The departments most affected by the closure in terms of the number of employees temporarily laid off are: Defense, Health and Human Services, Commerce, NASA, State, and agencies such as the CDC and NIH, which will impact research. Security agencies such as Justice, ICE, and Homeland Security will continue to operate but without pay.
4. The SNAP program may be affected, as it is at risk of running out of funds since there has been no new allocation.
5. There is a possibility that Trump’s threat to seize the opportunity and lay off many employees could materialize.
6. Contract employees working for federal agencies will not be working or receiving their salaries. Payments to contractors will also be postponed.
7. The unemployment rate will increase during the period, as federal employees who are temporarily laid off are considered unemployed and are eligible for unemployment insurance.
8. The availability of economic statistics, especially from the Bureau of Labor Statistics and Bureau of Economic Analysis, will be severely affected. These data will not be processed and will likely be available with a delay, which will affect the Federal Reserve and markets’ monitoring of the economy during the shutdown.
Leslie Adames is the director of economic policy and analysis at Estudios Técnicos.
