Forex Flash: Government shutdowns - Nomura

Aichi Amemiya, economist at Nomura note that while Government shutdowns may have limited economic effect but is politically dangerous.

He starts by noting that the current authorisation, or “continuing resolution” for most discretionary government spending is scheduled to expire on 27th March. If this authority is not extended, non-essential government activities will shut down thereafter. He expects an agreement to be reached before the deadline to avoid a shutdown. Nevertheless he writes, “the risk of a government shutdown is great enough to justify analysis. Although we would expect the economic impact of a government shutdown to be modest, the potential political fallout is big enough to drive both sides to reach an agreement.”