This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Government Shutdown Could Derail Recovery

NEW YORK ( TheStreet) -- As the clock ticks down to the looming government shutdown, many analysts fear a rapid decrease in consumer confidence and spending could potentially derail the U.S.'s fragile economic recovery.

If lawmakers are unable to agree on a new budget measure before the current continuing resolution expires just after midnight on Saturday, federal departments and agencies will be required by law to execute a government shutdown.

Passage of an appropriations bill or an extension on negotiations would effectively forestall the shutdown, but the budget talks between Republicans and Democrats seem far from resolution.

If the government is shuttered, federal departments and agencies would have to comply with contingency plans set forth by the Antideficiency Act of 1870, and therefore would have to cease all operations, the Office of Personnel Management explained.

Hundreds of thousands of federal employees would be told to stop working, the economic effects of a shutdown would reverberate throughout the nation, and the longer it lasts, the more dire the financial repercussions, Gus Faucher, director of macroeconomics at Moody's Analytics, told TheStreet.

"If it starts stretching to two to three weeks, there is a potential for a negative impact on the economy, particularly through confidence," Faucher said. "If people feel that the government can't really handle this and can't get their house in order, then we could see consumers get a little bit anxious."

Many federal employees wouldn't be allowed to work, not even as unpaid volunteers for the government, and would be placed in a temporary non-pay status.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,672.60 -141.38 -0.79%
S&P 500 2,051.82 -11.33 -0.55%
NASDAQ 4,757.8790 +7.4820 0.16%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs