Prospect of government shutdown poses a new threat to U.S. economy

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The looming government shutdown — combined with growing strikes, student loan repayments and rising gas prices — creates new challenges for the U.S. economy.

in economic losses, including $100 million in unpaid wages and more than $500 million in corporate losses, according to Anderson Economic Group in East Lansing, Mich. Experts say the strike could drag on for weeks or months, as union leaders negotiate with General Motors, Ford and Jeep-maker Stellantis. The UAW on Friday announced it was expanding the strike from three plants toA government shutdown, meanwhile, could cost the U.S.

Christine, a federal worker in Boston, is already cutting back in anticipation of Oct. 1. That’s when she’ll begin owing $800 a month in student loan payments again — and if the government shuts down, also the day she stops getting paid.She’s been having flashbacks to 2018, when the 35-day government shutdown meant she was working without pay and “constantly watching the news” for updates on congressional negotiations.

“A shutdown is the last thing we need right now,” he said. “Our staff is already worried: What if I can’t get my hours? What if I can’t earn enough to pay my bills? When someone doesn’t go out to dinner because they haven’t gotten paid, we can’t make up for that.”Still, Americans are being buoyed by a strong labor market that has it made it possible for many to keep spending. The unemployment rate, at 3.8 percent, is near historic lows, and wage growth is finally outpacing inflation.

Even though the worst didn’t materialize, many business owners, federal employees and Social Security recipients say the uncertainty over their finances left a lasting toll. Fitch Ratings downgraded the United States’ credit rating for the first time, saying “repeated debt limit political standoffs and last-minute resolutions have eroded confidence in fiscal management.

 

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