Finansanalytiker: Federal nedstängning kommer troligen inte att påverka ekonomin nämnvärt | NTD NYHETER

The federal government shutdown could negatively impact U.S. GDP, Treasury Secretary Scott Besson said. Joining us now to discuss is Daniel Akai, Chief Economist at TRESS's Hedge Fund, International Financial Analyst, and author of the book Freedom or Equality. Good afternoon, Daniel. Always great to see you. So what do you think here? Good afternoon. How much could a shutdown meaningfully impact GDP and economic growth? Quite limited, to be fairly honest. Don, if you look at the latest figures of GDP growth, the GDP growth in the United States is about 3.8 percent. It's expected to be around 3.9 percent in the third quarter annualized, and that is with a reduction in government spending. So if you look at the global elements that mean the most for GDP growth, we could have a small reduction in government consumption. There will be no impact on the part that comes from defense, because that is not affected by the shutdown. And maybe there is, I don't know, maybe 0.1 percent at best, at best or at worst. So very limited, I would say, considering the evidence of two quarters of negative government consumption, in which federal government spending has been reducing by 5 percent per quarter, and it has had no impact on economic growth. Actually, the opposite. No, sometimes what you find, as it happened in other countries, is that when you start reducing government spending, that limits economic growth in many cases, then what you get is an acceleration. So I don't think that there's going to be a significant impact. Okay, so Daniel, President Trump said that many federal workers could actually lose their jobs. They may be cutting some people there. How does a shutdown impact that? Does it save money or does it cost money in the long run? Well, obviously reducing the excess of government jobs is a very important thing to do, because you have to remember that the Biden administration increased government jobs by about 50,000 a month every month. And those weren't jobs in security, police force or firemen. Those were mostly in administrative and in government agencies. So when you reduce those excessive government jobs, you do two things. Number one is that you save quite a bit of money. We have seen a reduction of 97,000 government jobs in 2025, almost bringing down the number to the 2022 levels. But you also have another important factor, is that when you start saving money from bloated government spending in administrative areas or government agencies, then what you start to see is that you can have a little bit more money saved in order to get more police force, get more security, get more fire people, get more people in the parts of government that matter, in education, for example, where it's actually something that can be improved. So Daniel, you know, last week, right, stocks hit new records despite this shutdown and it was led by technology, small cap and health care shares. Does a shutdown affect things like business investment, confidence and the stock market? Usually no, because I think that most investors understand that a government shutdown like the debt ceiling negotiations always end with a negotiation and that that negotiation actually limits the pace of government borrowing and government debt. That's why investors are relatively confident. They see that the economic impact is going to be very limited, very limited if any. And at the same time, they see that these negotiations may end with a significant reduction in the fat of the of the administration and strengthening the productive and private sector. So obviously, for technology, the government shutdown has no impact whatsoever. And certainly for health care, as you mentioned, very, very little as well. And I also think that there is an important factor. One of the things that has kept investors concerned about equity markets and about bond markets was the relative weakness of the US dollar, which was a direct consequence of the fears about the sustainability of government borrowing and the federal debt. If these policies that are being announced are implemented and the deficit starts to be under control and government spending continues to be under control, those things are going to be positives for the US dollar and positives, obviously, for US debt. We have thankfully seen how government bond yields, US treasury yields have fallen, which is a positive sign. And that obviously leads to more optimism in equity markets. But now what we need to see as well is investors understanding that the dollar is not at risk and that the government is going to curb excessive government spending and maintain the dollar as the world reserve currency. OK, well, let me follow up on that point you just made here. Doesn't having a shutdown in itself sort of create this this idea that perhaps the US is not able to govern responsibly? Does that impact the US's credibility? No, it doesn't. Actually, it's the opposite. I sometimes argue with my colleagues over here in Europe and in the UK that I wish there was a government shutdown in these countries, because the problem in France, for example, is that the government enters into a five, six, seven percent deficit. Nothing happens. It continues to grow and grow and grow without any control. A lot of people say that the government shutdown or the debt ceiling negotiations are pointless because they always end up reaching a negotiation and that they should not exist. People don't understand that these are essential measures to limit the amount of debt and the amount of spending that governments enter into. And I always say that, yes, it's true that the US federal debt is very high. But if there was no government shutdown negotiation and if there was no debt ceiling negotiation, the level of US debt would be absolutely astronomical. OK, let me follow up on another point you made earlier, and you said that it doesn't really impact investors. But we didn't get the jobs report last week, right, due to the shutdown. So what are investors looking at? What's the impact of that? Well, I think that investors looked at the ADP report and saw that job creation was weak with elevated rates. Therefore, immediately, investor reaction pointed to a faster pace of rate cuts from the Federal Reserve, which inevitably also leads to more optimism from markets. Lower cost of borrowing, lower cost of money is quite significant, a boost for equity markets. So the ADP report is something that people are looking at. Independent reports, the great thing about the US economy relative to other economies, particularly in the euro area, is that apart from the official data, you have quite a bit of very reliable independent data. You don't have the official CPI, but you have trueflation or hedge eyes, inflation measures, or so many others. It's great. It is a fantastic wealth of information, independent and official information in the United States. So I don't think that investors are going to be particularly worried. I think that they would be worried if the government shutdown is extended for, let's say, three months. But it doesn't look like it's going to be that way. OK, Daniel, just one final question. You said earlier that a shutdown potentially will have limited impact on the economy. But isn't it true that consumers or federal employees, they don't get paid during this period? And if a lot of people don't get paid, they won't spend as much. And doesn't that impact the economy because it's driven by consumer spending? Allow me to put it the other way around. Why is France in stagnation with when the level of public jobs and the level of the public sector is so enormous? The idea that if you cut spending in government, there's going to be a monumental impact on consumption and investment and on GDP is obviously quite defended and promoted by governments themselves. But if you look at the fact that, for example, in Germany or in France, there is absolutely no government shutdown and actually government jobs are growing and the level of employment in the public sector is enormous in the case of France in particular. And the boost in consumption does not exist. So at the end of the day, think about this. This is all about money. This is a monetary analysis. You are increasing government debt in order to pay salaries. Those salaries, part of those will be saved. Part of those will consume. What happens is that the impact on consumption is very limited relative to the negative impact of government debt increasing. So what needs to be done is to address the imbalances of the public sector in the United States and obviously bring back as many of those jobs that are needed and obviously pay them the way that they should be paid. Another interesting point that you may find fascinating is that in countries in which there was a very significant reduction of administrative, I'm talking about the unnecessary part of government jobs, consumption actually rose. Why? Because obviously the impact on the private sector is much lower in terms of the amount of taxes that are expected in the future. Well, okay, Daniel, it's always interesting to hear your insight. Thank you very much for your time today. Always a pleasure. Thank you very much.