The economic implications of the government shutdown

Kane Jaklitsch, Contributing Writer

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On Friday, President Donald Trump and congressional leaders finally reached a deal to end the United States’ longest-running government shutdown, at least temporarily.

President Trump wants $5.7 billion in funds for a US-Mexico border wall, but Congressional Democrats are reluctant to grant that sum for this purpose.

Even though the government has been reopened and the 800,000 laid off workers receive back pay, the border issue still remains unresolved.

The current plan does not include any of the money for the wall that Trump had demanded and essentially was the same approach that he rejected in late December.

Trump presented the agreement as a victory, but also said that if Republicans and Democrats cannot reach an agreement on wall money by the February deadline, he is ready to resume his demand or declare a national emergency to bypass Congress altogether.

The economic implications of the shutdown and potential for more disruption ahead, have become a main concern for global investors.

Most analysts estimate that the 35-day partial shutdown shaved a few tenths of a percentage point from annual economic growth in the first three months of 2019.

S&P Global Ratings estimates that the economy lost $6 billion because of the government closure. The amount that the economy lost actually exceeds the funding amount for the wall Trump is demanding.

The government shutdown has had a huge impact on Wall Street, in particular the critical issue of backed up IPOs.

The government shutdown raised concerns for many big companies planning on issuing an IPO in 2019, and if a deal is not reached in February, these issues could continue.

Dozens of tech companies are waiting to go public, including Uber, Lyft and Pinterest, many of which have been supported for more than a decade by private capital.

Some companies are now looking at ways to go public without input from the Securities and Exchange Commission.

Thursday morning, biopharmaceutical firm Gossamer Bio issued its IPO, offering 14.375 million shares at $16.

This announcement would have attracted very little attention were it not for the unusual path the company chose to go public. Despite the government shutdown, fourth quarter earnings largely exceeded Wall Street’s expectations. Tech stocks led the gains, with Apple jumping 2.7 percent along with Microsoft and Alphabet both rising more than 1 percent.