He Donald Trump Government You have until Tuesday at midnight to avoid paralysis in the national administration of USAconsequence of the stagnation of the budget debate in Congress. Among analysts, doubts about the impact that this potential could have grow “closing” temporal in American economy, and, consequently, in the monetary policy of the Federal Reserve (Fed).
The republican leader in the Senate, John Thunehe accused the opposition of being able to take the country to a “Shutdown” for political motivations. “A closure is totally the responsibility of the Democrats. The ball is on his court”he affirmed this Sunday to the American press. And insisted that the House of Representatives He already approved a project to extend the financing for seven weeks, so he stressed that the Senate I should approve it as soon as possible.
On the opposite path, the head of the Democrats in the Senate, Chuck Schumer, He argued that the responsibility will be of the ruling party, since he argued that there is no willingness to negotiate: “God does not want Republicans to close the government. The American people will know what their responsibility is.” And he assured that his party will not support an extension without conditions: “We are listening to people who need help in health care”.
In recent weeks, the US Congress He failed to agree on a budget law that finances the federal government just when the new fiscal year is about to begin, the October 1. As a consequence, the government faces a high probability of entering a partial closure, since legislators have just two days to reach an agreement and have a budget that allows to operate normally.
Consulted by Scopethe analyst of Pepperstone, Felipe Barragánhe explained that “The estimates that this event occurs around 60%”. In any case, he added that “it should be noted that in previous situations, as in 2023, a last -minute agreement that avoided the partial paralysis of the government was achieved.”
Negotiation against clock
In this context, Trump summoned the leaders of both games to the White House on Monday in a last attempt to unlock the negotiations. In addition to Thune and Schumerthe president of the House of Representatives will participate, Mike Johnson and the democratic leader in deputies, Hakeem Jeffries.
In your latest report, from Personal Investor Portfolio (PPI) They explained that “Trump had canceled last week an encounter with Schumer and Jeffries, after disqualifying the Democratic demands and considering that the meeting would be unproductive.”
And they added that “the decision was made after talking on the phone with Johnson and Thune, who recommended not advancing in an agreement with the opposition. Despite that, today they will all be on the table.”
How does a “Shutdown” work?
Barragán He explained that “Under a Shutdown scenariodiscretionary expenses are frozen and those offices or state agencies without financing must suspend their non -essential operations. “
That “would imply the potential temporary cessation of functions of around 900,000 employees and a delay in the payment of salaries to federal workers until financing is restored. “In addition,”The publication of macroeconomic figures in the US could be delayedgenerating volatility and uncertainty in markets. “
Anyway, he added that “The payment of interest in debt and social security benefits would not be affectedso the impact on the fiscal deficit (or cost savings) would be minimal. “
From PPI they warned that this potential closure could be different from the previous ones. “The White House and the Office of Administration and Budget have already anticipated that they will apply a more aggressive approach, cutting personnel in programs without financing and are not aligned with Trump’s priorities,” they said.
And they recalled that “The president already faced a Shutdown in his first term: It began in December 2018 and extended for 35 days, the longest in history“
The economic impact: does it affect the Fed?
In Eco Go They mentioned that “the lack of budget agreement could lead to mass dismissals and significantly affect economic activity, With an estimated impact of 0.1 percentage points of GDP for each week of ‘Shutdown‘”
Barragán clarified that “the effects are usually limited and depend on the closure duration.” He commented that “several analysts They expect a fall close to 0.15 percentage points in the growth of the GDP of the fourth quarter of 2025which should be reverted almost completely in the next quarter, provided that the situation is normalized before that date. “
In addition, he mentioned that “although a transitory increase in the unemployment rate could be recordedthe impact on other labor indicators would be limited, since these dismissals initially count as ‘temporary’. “
And stressed that, as a consequence of “The effect on growth and employment would be reduced, Fed monetary policy should not undergo relevant changesas long as the closure does not extend. “
However, from UBS They recalled that the economic data of “the Labor Statistics Office (monthly inflation and employment reports, as well as weekly applications for unemployment), Economic Analysis Office (GDP, personal income and expenses) and the Census office (Retail sales, housing construction) would be suspended during closure. “
Therefore, “the lack of data during the same would prevent those responsible for monetary policy analyzing the evolution of the economy Before the meeting of the Federal Open Market Committee (FOMC) from October 28 to 29, at which time the impact of tariffs could begin to be evident. “
Source: Ambito
