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US Government Shutdown

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by

JJ Rushworth

on 24 October 2013

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Transcript of US Government Shutdown

US Government Shutdown
The effects on world business
US Congress
Senate
House of Representatives
Cause of the Shutdown
Budget deadline - 1st October
Obamacare
Dodd-Frank Act
Environmental Protection Agency
Obamacare
Sikorsky Aircraft of Conneticut
3,000 employees furloughed
United Technologies
4,000 employees furloughed
NBC News (2013)
NBC News (2013)

Past Shutdowns
18 shutdowns
Latest: 1995-1996
Whitehouse (2013)
The Economist (2013c)
Wearden (2013)
800,000
furloughed
$1 billion
lost
O'Keefe (2011)
BBC (2013a)
Effects of the shutdown
800,000
furloughed
employees
401
National Park
services closed
Johanson (2013)
Stewart (2013)
279 million recreation visits
$30.1 billion injected into US economy
National Park System
US Travel Association
Costing $152 million per day
American Hotel &
Lodging Association
Costing $8 million per day
Johanson (2013)
Sikorsky Aircraft of Connecticut
2,000 employees furloughed
United Technologies
4,000 employees furloughed
Private businesses and contractors
Consumer
Confidence
Gallup (2013)
Harding (2013)
Subdued economic activity
Higher borrowing costs
Equities become more volatile
Gittleson (2013)
The Times of India (2013)
Lack of investment
Decreased value of U.S. dollar
Mankiw (2010)
Imports
and
Exports
Exports - $187.5 billion per month, $2.25 trillion in 2013
Imports - $227 billion per month, $2.72 trillion in 2013
Worldwide Impact
Glover (2013)
Trading Economics (2013a&b)
"The US economy is the number one in the world, what happens there affects all of us."
- Philippine President Benigno Aguino
BBC (2013c)
Foreign Businesses
Imports and Exports
Credit Rating
Decreased Aggregate Demand
"The total spending on goods and services made in the economy"
- Sloman (2007)
Consumer spending on domestic products
Private investment within the country
Government expenditure on domestic goods and services
Expenditure on the country's exports.
Decreased aggregate demand will:
Reduce economic growth
Raise levels of unemployment
Raise levels of inflation
Estimates:
The Economist: 0.1-0.2%
Moody's Analytics: 0.3%, 1.4%
Goldman Sachs: 0.2%
(The Economist, 2013c)
(Wearden, 2013)
(Stewart, 2013)
Actuals:
Macroeconomic Advisers: 0.3%
Standard and Poor's: 0.6%
(Lowrey et al, 2013)
(Lowrey et al, 2013)
$24 billion
3% to 2%
$24 billion
3% to 2%
Raised from 308,000 to 373,000
66,000 new claimants in one week
Shares have fallen:
UK FTSE index: 0.1%
German Dax index: 0.5%
Prices of gold have risen:
More than 2% increase
$1,309 an once
US currency has fallen:
Dropped 0.7% against the pound
Dropped 0.7% against the euro
BBC (2013b)
Germany
India
VW reported declining numbers of customers
"In the long term this will certainly have an impact"
- VW manager Mark McNabb
Handelsblatt (2013)
Indian exports standing idle at ports
"There is tremendous concern about the impact a lengthy shutdown could have on our businesses."
UK
BAE Systems furloughed employees
- BAE Systems President and CEO Linda Hudson
Hudson (2013)
$36 billion exported to the US
12-14% of total exports
Haidar (2013)
China
US likely to reduce spending
Impacts Chinese exports to US
Tian et al (2013)
Chinese exports reduced
AA+ credit rating 1 in 3 chance of being downgraded
AAA credit rating under review for downgrade
"A" credit rating downgraded to "A-"
Standard and Poor's (2013b)
Fitch (2013)
(Rahmann, 2013)
"The government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future"
Dagong (2013)
What's next?
Shutdown ended on 16th October after 16 days
New deadline: 15th January 2014
Another shutdown is possible
The Economist (2013a)
McClam (2013)
Standard and Poor's, (2013a)
Trading Economics (2013c)
Full transcript