Goldman Sachs analysts predict that the U.S. government is "more likely than not" to shut down later this year due to spending disagreements, which could temporarily impact economic growth by reducing it by 0.15-0.2 percentage points per week, with past shutdowns having minimal impact on equity markets.
Despite recent positive economic indicators, experts warn that a recession may still be on the horizon due to the lagged effects of interest rate hikes, increased debt, and a slowing manufacturing sector, cautioning investors not to become complacent.
Treasury Secretary Janet Yellen believes the US economy is on a path that will prevent a recession while maintaining control over inflation, as polls show increasing optimism among Americans; she also expects a strong labor market despite slower economic growth.
Treasury Secretary Janet Yellen and Goldman Sachs may be optimistic about a "soft landing" scenario for the US economy, but the author remains skeptical due to factors such as a deeply inverted yield curve, declining Leading Economic Indicators, challenges faced by the consumer, global growth concerns, and the lagging impact of the Fed's monetary policy, leading them to maintain a conservative portfolio allocation.
The potential government shutdown threatens to deprive the Federal Reserve of crucial data on the labor market and inflation, which could hinder its ability to make informed decisions about the economy and interest rates.
Despite rising gas prices, Americans remain optimistic about inflation easing, as expectations for inflation rates in the year ahead have fallen to the lowest level since March 2021, according to a consumer sentiment survey from the University of Michigan. However, concerns are surfacing about a potential government shutdown, which could dampen consumer views on the economy.
US Treasury Secretary Janet Yellen believes that despite the national debt nearing $33 trillion, the federal government's debt burden remains under control due to the net interest as a share of GDP remaining at a reasonable level. However, critics warn of the potential risks of a growing debt and credit bubble. Additionally, Yellen hopes for a quick resolution to the United Auto Workers' strike, stating that the economy remains strong overall.
U.S. Treasury Secretary Janet Yellen acknowledges a "disconnect" between Americans' negative views on President Biden's handling of the economy and the actual performance of the economy, but predicts that sentiment will improve as the effects of administration legislation and policies become evident.
The White House warns that a government shutdown at the end of the month could have damaging consequences for the economy, national security, and the American public.
The Federal Reserve has paused raising interest rates and projects that the US will not experience a recession until at least 2027, citing improvement in the economy and a "very smooth landing," though there are still potential risks such as surging oil prices, an auto worker strike, and the threat of a government shutdown.
Investors shouldn't worry about a government shutdown as it is unlikely to have a significant impact on the markets.
President Biden warns of the potential consequences of a government shutdown, urging Republicans in Congress to take action to prevent it.
A government shutdown on October 1 is likely, but it is not expected to have a significant impact on financial markets or cause an economic recession.
A government shutdown in the US may cause the Federal Reserve to delay an interest rate hike and could impact the recent strength of the dollar, analysts have warned. The shutdown could also lead to a delay in key inflation data, which would affect Fed policy decisions, and may put pressure on consumer spending.
The impending government shutdown may have an impact on the financial markets, according to Kristina Hooper, Chief Global Market Strategist at Invesco.
A brief government shutdown is unlikely to significantly slow down the economy, but a prolonged shutdown could hurt growth and potentially impact President Biden's re-election prospects.
U.S. Treasury Secretary Janet Yellen warns that a potential government shutdown would harm economic progress, impacting key programs for small businesses and children and delaying infrastructure improvements.
The summer's positive economic indicators, such as lower inflation and strong job numbers, have led to optimism that the US will avoid a recession, but factors such as a potential auto strike, the resumption of student-loan repayments, and a government shutdown could contribute to a downturn. The combined impact of these factors, along with others like higher interest rates and oil prices, suggests that a recession may be looming.
Investors will be closely watching market reactions to a late deal to avert a government shutdown, as well as key data on the labor market this week, while concerns about higher interest rates and the impact on the economy weigh on stock futures.
The chaos in Washington and uncertainty surrounding a possible government shutdown could make it less likely for the Federal Reserve to raise interest rates again this year, as the economy and inflation appear to be cooling off.
Treasury Secretary Janet Yellen remains optimistic about the US economy despite challenges such as record inflation, rising interest rates, and geopolitical conflicts, citing the strong labor market and resilient consumer as contributing factors to a soft landing, while also discussing the potential impact of artificial intelligence on the economy and the need for Congress to allocate funds for Ukraine.
US Treasury Secretary Janet Yellen stated that she sees no evidence of market dysfunction and finds the recent spike in bond yields to be normal, not a sign of an overheating labor market, despite the worst bond bear market in US history.
Treasury Secretary Janet Yellen is optimistic about the ability of American consumers, businesses, and banks to handle rising interest rates, and she believes the Federal Reserve's efforts to tame inflation are going well. She also dismissed concerns that a strong jobs report could have negative effects on the economy.
