Washington. On Wednesday, the U.S. federal government went into a formal shutdown. This is due to the failure of the Senate, the upper house of parliament, to pass the spending bill and the lack of consensus on the budget. This is the first shutdown since 2018.

Thousands of federal employees have been placed on unpaid leave due to TAG_OPEN_p_30 the shutdown. Non-essential government services have been shut down, from national parks to the Bureau of Labor Statistics under the TAG_OPEN_em_17 Ministry of Labor . As a result, the monthly employment report, which was scheduled to be released on Friday, could not be published. The suspension of the report is expected to put more pressure on the market at a time when uncertainty is increasing in the economy.

Political reasons and accusations

The bill failed to get the necessary votes after Democrats and Republicans failed to reach an agreement on government spending. The Democrats’ proposal received only 47 votes in the Senate of 60 votes. Then the Republican proposal failed.

TAG_OPEN_p_28Republican leaders have blamed Democrats for the shutdown. Republican leader John Thune said, “The Democrats, under pressure from the extreme left, shut down the federal government. House Speaker Mike Johnson said that thousands of Americans will see signs on government buildings today that say ‘Closed until further ordered’. ”

Democrats, on the other hand, have blamed Republicans.TAG_OPEN_p_27 Senate Democrat Chuck Schumer said, “Republicans have pushed the country into crisis by staying out of negotiations. Senator Chris Murphy told reporters, “Ask the Republicans how long it will be. ”

Impact on employees and services

It is estimated that about TAG_OPEN_p_26 800,000 federal employees could go on temporary leave due to the shutdown. Many have received “furlough notices”. Essential services — such as the military, border security, air traffic control, social security and health services — will continue unabated. But non-essential services — such as student loans, food inspections, preschool funding and national park operations — will be affected.

Impact on the economy

Experts estimate that if the shutdown lasts longer, the U.S. economy could slow growth by 0.1 to 0.2 percentage points a week. Shutdowns in the past, though short-lived, had a negative impact on immediate output and employment.

TAG_OPEN_p_24 The 36-day shutdown in 2019 was the longest in U.S. history. This time the shutdown is expected to be even bigger.

Impact on the global economy

As the U.S. economy is the world’s largest, the shutdown is expected to have an impact on international markets.TAG_OPEN_p_23 The suspension of monthly employment reports will make financial markets uncertain. Because investors rely on the U.S. labor market to gauge the direction of the global economy, it can cause volatility in international markets.

In addition, economists say that a slowdown in consumption and production in the US economy could have a negative impact on world trade.TAG_OPEN_p_22 The shutdown is expected to bring more trouble to the global economy, which is already destabilized by tariffs, geopolitical tensions and technological changes.