How will the federal shutdown affect the economy?

"Shutdowns of the federal government usually don't leave much economic damage. But the one that started Wednesday looks riskier, not least because President Donald Trump is threatening to use the standoff to permanently eliminate thousands of government jobs, and the state of the economy is already precarious. For now, financial markets are shrugging off the impasse as just the latest failure of Republicans and Democrats to agree on a budget and keep the government running."

"A couple of days: Financial markets may experience some fluctuation, but that likely won't be significant if funding is restored before too long. Workers will get paid back, and ideally, there's not much of an economic lag. Longer term: Federal workers get furloughed and the federal government delays some spending during a shutdown. But when the funding comes back, workers go back to their jobs and collect back pay, and the government belatedly spends the money it had withheld. It's pretty much a wash."

"Very long term: If there are significant disruptions to sectors like air travel due to shutdown-related circumstances - like the security screeners and air traffic controllers who called out sick during the 2018-2019 shutdown - that can mean more trouble for industries. But even in that 35-day shutdown, the longest in U.S. history, the Congressional Budget Office estimates that just 0.02% was shaved off 2019 U.S. gross domestic product, the nation's output of goods and services."

Financial markets are largely dismissing the shutdown as routine budget gridlock, though short-term volatility is possible if funding is not quickly restored. Brief shutdowns typically furlough federal workers and delay government spending, but back pay and belated purchases usually offset most effects. Extended disruptions can harm sectors requiring continuous services, such as air travel, when security or air-traffic personnel are absent. The 35-day shutdown trimmed about 0.02% off 2019 GDP per the Congressional Budget Office. Threatened permanent eliminations of thousands of government jobs could increase unemployment and deepen economic strain if implemented.

Read at Fast Company