Thijme Schriek @DrWily: "- 𝗧𝗵𝗲 𝗖𝗼𝘀𝘁 𝗢𝗳 𝗧𝗵𝗲..."

Netherlands

- 𝗧𝗵𝗲 𝗖𝗼𝘀𝘁 𝗢𝗳 𝗧𝗵𝗲 𝗚𝗼𝘃𝗲𝗿𝗻𝗺𝗲𝗻𝘁 𝗦𝗵𝘂𝘁𝗱𝗼𝘄𝗻 - Trump often uses any crisis, no matter how urgent, to advance his own plans. I mean, his entire presidency so far has been this way: you either do what he wants or he will inflict massive damage, no matter who is getting hurt in the crossfire. And now, with the government shutdown, the damage could be massive, with Trump even threatening not to pay workers, let some go for good, and more. How could this impact the US economy? Well, let's look into it! - 𝗟𝗼𝘄𝗲𝗿 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗚𝗿𝗼𝘄𝘁𝗵 - Now, this effect is quite noticeable: the government shutdown leads to lower economic growth for several reasons. Many people working for the government aren't being paid at the moment, many important institutions and agencies aren't able to perform their duties, and many government support programs are not functioning properly. All of this leads to lower GDP growth, and since 23% of US GDP is linked to the government, this could be huge, especially if it lasts a long time. Quote: "A four-page Council of Economic Advisers memo estimates a monthlong shutdown would reduce consumer spending by 30 billion dollars, half from direct impacts to federal employees and the rest from spillover effects to other sectors. The memo leans on other analyses from Goldman Sachs, Fiserv, and the Federal Reserve in reaching its conclusions." According to J.P. Morgan, each week a shutdown subtracts approximately 0.1% of annualized GDP growth. Therefore, the longer this lasts, the greater the damage will be. - 𝗕𝗼𝗻𝗱 𝗗𝗼𝘄𝗻𝗴𝗿𝗮𝗱𝗲 - In the past, budget disputes and government shutdowns have led to a decline in the credit ratings of US bonds. We have seen this in both the 2010s and the 2020s so far. This new shutdown and budget dispute could once again negatively impact the US's credit rating. This could lead to higher interest rates on US bonds and interest rates in general, which wouldn't be beneficial. The Fed remains relatively hawkish, and we are seeing cracks form in the labor market; therefore, a downgrade in the US will likely exacerbate this situation. - 𝗡𝗼 𝗘𝗰𝗼𝗻𝗼𝗺𝗶𝗰 𝗗𝗮𝘁𝗮 - This is a massive problem, as we clearly saw the labor market slowing down before the shutdown. Meanwhile, the Federal Reserve finds itself in a difficult spot, with inflation still above the 2% target while the labor market appears to be faltering. And now, the central bank must make decisions without access to government data, which will make their job much harder. Quote: "Federal agencies including the Bureau of Labor Statistics have suspended operations, which means that the publication of official economic data — including the U.S. jobs report and the Consumer Price Index (CPI) report — will be delayed. This could pose a headache for the Federal Reserve, which is mulling the prospect of further rate cuts ahead of its next meeting in October." In the short term, they can manage without the data, but if this shutdown lasts for months, it could become a problem. Without the relevant data, the central bank will struggle to decide what to do in December when the next interest rate policy decision is due. Overall, I hope that this shutdown doesn't last long, as the longer it takes, the higher the chances of disaster will be. Sources: fiscaldata.treasury.gov/americas-finance-guide/federal-spending/ fred.stlouisfed.org/series/FYONGDA188S www.jpmorgan.com/insights/global-research/current-events/government-shutdown www.politico.com/news/2025/10/01/us-gdp-loss-shutdown-00590927 en.wikipedia.org/wiki/United_States_federal_government_credit-rating_downgrades If you liked this short post, FOLLOW my profile for more; if you agree with my investing philosophy, COPY my portfolio to join the ride! My Performance speaks for itself! ✅ +40% in 2024! ✅ Well-diversified portfolio! ✅ Long-term mindset! ✅ Low-risk score of only 4! Be sure to copy my portfolio! $SPX500 $NSDQ100 $TLT (iShares 20+ Year Treasury Bond ETF ) $BTC $GOLD

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