Good morning, Peter Vanham here in Geneva, filling in for Alan.
Looking from the outside in, it’s hard to understand why the most powerful government in the world decides to shut itself down every few years. As another U.S government shutdown looms, the financial consequences for millions of employees are immediate; those for the U.S. government’s reputation and creditworthiness appear farther down the road.
CEOs are concerned about a shutdown's impact on the broader economy. In a new poll by the Committee for Economic Development (CED), a division of the Conference Board, a nonpartisan think tank, a large majority (91%) of CEOs and board members surveyed said they are concerned that a government shutdown lasting more than a couple of days will hurt the economy.
And a shutdown—perhaps a prolonged one—is indeed likely. With the deadline to avoid it—Saturday at midnight—just some 40 hours away, Goldman Sachs now puts the odds of a shutdown at 90%, Fortune's Will Daniel reported yesterday. If it does happen, each week of a shutdown will cost the U.S. approximately 0.2% in quarterly annualized growth, the bank also calculated.
In response, more than 4 out of 10 business leaders in the CED poll said they are already adjusting their business plans. It is a frustrating reality that amid all the other global turmoil and economic headaches, American business leaders need be concerned about their own government’s ability to fund itself to the point of shifting their business plans.
How did it come to this? The immediate trigger, this time, are hardline demands of half a dozen Republican rebels, including Matt Gaetz, Lauren Boebert, and Marjorie Taylor-Greene, the FT reported yesterday. In that light, it is surprising that a majority (56%) of business leaders in the CED survey put the blame for the current situation on both parties.
But perhaps that is because of the longer-term causes of the shutdown. After so many bruising shutdown experiences in the past, it is baffling that there's still no bipartisan committee or initiative to prevent them. The CED, for its part, suggests a “congressional commission on fiscal responsibility,” and sees broad support for it among its survey respondents.
Whether that message will get any traction in today’s dysfunctional Congress, however, remains far from certain. Adjusting one’s business forecasts may be the more pragmatic way forward for now.
More news below.
Peter Vanham
peter.vanham@fortune.com
@petervanham
