How the U.S. Government Shutdown Would Impact US Economy

This morning, the stock market gapped down and opened significantly lower compared with yesterday’s closing price. The reason behind it is that investors warned of the potential damage to US economy caused by government shutdown.
On the other hand, the sluggish income growth and consumer spending would curtail the economic recovery.

Some analysts estimated that a shutdown of the U.S. government would cut Gross Domestic Growth (GDP) by over one percent in the fourth quarter this year.

During the shutdown period, government workers are furloughed and lose income source. On the other hand, businesses would keep back investing, and consumers would reduce spending. These factors primarily impact US economy and GDP.

Please note that the government shutdown may impact those home buyers who are looking for government-backed mortgages.  The loan process should be expected to delay during the shutdown. The Federal Housing Administration (FHA) is not functioning during the shutdown.

The S&P 500 future dropped 16 pointes before the stock market opened on 9/30/2013 on probable government shutdown. 

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