"90% Odds of Government Shutdown" Democrats Warn

Following Nomura’s estimate of a 40% chance of government shutdown yesterday, thanks to the pending vote for the Republican’s “Obamacare-Delay” bill, Democrats note the odds of a shutdown of the government are now at 90%.

A Democratic congressional aide added, “the only reason I’m not putting it at 100 percent is because nothing’s certain in American politics.”


As we noted previously:

From Bloomberg, citing the Japanese bank:

  • Not obvious how gap between House, Senate proposals will be closed, and time for negotiations is short, Nomura strategists led by Lewis Alexander wrote in note.
  • Shutdown for a couple of weeks won’t have much of an impact on economy; impact of failure to extend debt ceiling “unknown, potentially very large and long lasting”
  • Contentious and potentially chaotic fiscal negotiations over next few weeks likely to generate volatility, biggest threat to economy
  • If govt shuts down for one week, assuming 36% of non-postal federal employees furloughed, temporary loss of wages, benefits would reduce annualized real GDP by ~0.1ppt
  • If shutdown lasts longer, decision on back pay for federal employees likely decisive for consumption
  • Week-long shutdown would delay Oct. 4 jobs report
  • If debt ceiling becomes binding, Treasury may have to pay debts in order of due date, may not be able to prioritize debt payments

The good news, and we use the term loosely, is the flip-side: the government has a 90% chance of continuing to serve on behalf of the 1% oligarchy on October 1 and well beyond.



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