Government Shutdown hampers US growth

The partial US government shutdown has taken US $ 24 billion out of the economy and will cut growth in the fourth quarter significantly, ratings firm Standard & Poor's has said. Moreover, S&P yesterday warned of more possible damage if the political battle over the budget and debt ceiling resumes in January, further scaring consumers, especially government workers laid off without pay during the shutdown. As Congress appeared to strike a deal yesterday to resolve the stalemate over a new budget and raising the debt ceiling, S&P said the impact of the two-week-old shutdown likely will take 0.6 percentage points off fourth-quarter growth. That would leave annualized growth in the October-December period at close to a sluggish 2 per cent rate, the ratings agency said. The fall in growth is mostly due to the furlough of hundreds of thousands of civil servants, as well as impacted government contractors, because the Congress could not agree a budget for the 2014 fiscal year that began October 1. "The bottom line is the government shutdown has hurt the US economy," S&P said. Government Shutdown: The Government Shut Down refers to a temporary halt in non-essential government services when lawmakers cannot pass the necessary funding measures in time. So far, in the US, the federal government was shut down twice. Once in 1995-96 and again in October 2013. Between 1976 and 2013, there have been 18 government shutdowns across the world. Standard & Poor's: Standard & Poor's (S&P) is an American financial services company. It is a division of McGraw Hill Financial that publishes financial research and analysis on stocks and bonds. S&P is known for its stock market indices and Governance scores (GAMMA) S&P is considered one of the Big Three credit-rating agencies, which also include Moody's Investor Service and Fitch Ratings.

What: US Growth hampered When: 17th October 2013 Why: Due to US Government Shutdown