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Nancy Koehn on BPR, 1/8/2018

The Shutdown Could Disrupt The U.S. Economy In A Big Way

Government Shutdown
Dawn arrives at the Capitol in Washington, as the partial government shutdown enters day 18, Tuesday, Jan. 8, 2019, as President Donald Trump holds to his border wall funding demands. Trump will speak to the nation tonight about the border in a televised address from the Oval Office.
J. Scott Applewhite/AP
Listen
Nancy Koehn on BPR, 1/8/2018

Will the government shutdown have a long-term impact on the U.S. economy?

Nancy Koehn, professor at the Harvard Business School, said that the shutdown could disrupt the economy on both a micro and macro level.

"What's interesting to me as someone who has done a lot of economic work is how we're beginning to see the cascading consequences," she said on Boston Public Radio Tuesday.

There are individual pains — like farmers not being able to get loans or aid to help cope with the U.S.-China trade war.

Read more: Shutdown Ratcheting Up Pressure On Mass. Families, Baker

But there are larger problems emerging, too. Koehn said the federal government will not be able to produce the kinds of data that investors rely on, which could slow investing and hiring decisions.

"The Department of Commerce will be late, if it's able to at all, to produce things like different kinds of key economic indicators: housing starts [and] consumer confidence," Koehn explained.

"We're now starting to have the chaos of all these different issues now cascading and the federal government, particularly the executive branch's, inability to anticipate and 'Band-Aid' for them now beginning to have macroeconomic effects," Koehn said.

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