Shutdown means workers furloughed, death benefits halted

The U.S. government shutdown has negatively impacted many U.S. citizens, which can result in negatively impacting the U.S. economy. The following article http://www.deseretnews.com/article/765639090/Shutdown-means-workers-furloughed-death-benefits-halted.html states that about 800,000 federal employees were furloughed on Tuesday. This means that these employees will not get paid and cannot work until the U.S. government starts fully operating again. If the government continues to be shut down, demand in luxury goods and non-essential goods will eventually shift to the left because the U.S. employees will no longer have the money to purchase those goods. Instead, they will have to focus on paying essential items such as mortgages, bills, etc. The article also states that the lost wages will start to have a ripple effect throughout the U.S. economy, resulting in at least $300 million in lost output each day. This loss can eventually affect the global economy. If this occurs global demand in non-essential goods will shift to the left because consumers will not have the money to purchase those goods. However, most likely demand in inferior goods like canned soup, peanut butter, etc. will shift to the right because the incomes of the federal employees has decreased.

1 comment:

Dr. Tufte said...

Amulek621: 100/100.

You need to fix your link following the directions in the sidebar of the blog, or I'll ding you 6 points.

I'm going to play the devil's advocate here.

Everything you've said is fine ... provided that your a Keynesian. Symmetry requires that if you believe a government shutdown will hurt the economy, then increasing government spending will help the economy.

You'd be surprised at the number of people who will debate this simple point.