While most economists predict that the shutdown will shave a bit off the GDP in the first quarter because of lost wages to the 800,000 federal employees going without pay, Shepherdson said the compounding effect on federal contractors and businesses that rely on the spending from federal employees will be even worse.
"We have no way of estimating the impact on government contractors, or the second round effects when those businesses fail, or have to delay paying their employees, subcontractors, suppliers, and creditors, but it will not be trivial," Shepherdson said in a note to clients. "Accordingly, if the shutdown were to last through the whole quarter, we would look for an outright decline in first quarter GDP."
What if the welfare payments to business stops? Well, government contracts get cancelled and corporations learn how to do without government welfare.
What we need is for contactors to write government closure statements in their contracts so both sides can be prepared in the eventual, and habitful closing of government. We will be closing it more often as millennials begin to refuse to cover welfare payments to contractors and pensions.
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