Unless an agreement with Congress is reached soon, President Trump this week indicated he is considering declaring a national emergency in order to fund the construction of a border wall on the southern border. A national emergency declaration would face significant legislative and legal opposition, yet it could create a path to end the partial government shutdown that tomorrow will become the longest in U.S history, exceeding the 21-day shutdown of 1995-96. (New York Times, Jan. 9 / NBC News, Jan. 10 / Politico, Jan. 10
Unless an agreement with Congress is reached soon, President Trump this week indicated he is considering declaring a national emergency in order to fund the construction of a border wall on the southern border.
- Federal Reserve Chairman Jerome Powell said this week that if the current situation is prolonged, it would start to noticeably affect the economy. "If we have an extended shutdown, I do think that would show up in the data pretty clear." Powell added that the full economic impact of closed government agencies is difficult to track because data usually provided by the Commerce Department is not currently available, due to the shutdown. (Economic Club of Washington video interview at 13:30, Jan. 10)
- Nine of the 15 Cabinet-level departments remain unfunded, including Agriculture, Homeland Security, State, Transportation, Interior and Justice. 800,000 federal workers won't receive paychecks due today. (AP, Jan. 11). Historically, federal workers ultimately do receive back pay for government shutdowns.
- According to S&P Global Ratings Chief U.S. Economist Beth Ann Bovino, "We estimated that this shutdown could shave approximately $1.2 billion off real GDP in the quarter for each week that part of the government is closed." (CNBC, Jan. 11) White House Council of Economic Kevin Hassett last week offered a similar assessment, estimating economic output would decrease by about 0.1 percent every two weeks. (Bloomberg, Jan. 3)
- President Trump this week cancelled a planned Jan. 21 trip to the annual World Economic Forum in Davos, Switzerland after recently saying he may keep the government closed for "months or even years." (Time, Jan. 10 and AP, Jan. 4)
Federal Reserve Chairman Jerome Powell said that if the current situation is prolonged, it would start to noticeably affect the economy. "If we ave an extended shutdown, I do think that would show up in the data pretty clear." (Economic Club of Washington video interview at 13:30, Jan. 10, 2019)
- Despite the shutdown, The IRS announced this week that the 2018 tax filing season will begin on Jan. 28. Last year, the IRS issued nearly $300 billion in tax refunds to 102 million taxpayers between January and May, with an average refund of more than $2,700. Any major disruption in tax refunds could dampen economic growth. A detailed IRS contingency plan for handling the tax filing season and enforcement and taxpayer assistance is expected soon. (IRS, Jan. 7 and TIME, Jan. 9)
- Additionally, until the shutdown ends, the EB-5 Immigrant Investor Regional Center Program and federal cleanups at Superfund sites around the nation are suspended.
- The National Association of Realtors yesterday reported that the partial shutdown is starting to cause transactional delays related to federal housing, mortgage, and other programs of interest to the real estate industry (NAR, Jan. 10).
- "All the fluctuations that's going on puts a pause on companies deciding what long-term investments to make," NAR chief economist Lawrence Yun said. "Do they actively purchase a commercial property knowing there could be further disruption in the future? They could be more hesitant or go on a more [smaller] scale." (Commercial Observer, Jan. 2)
- Negotiations over the border wall impasse broke down this week when President Trump ended a meeting with Democratic leaders. Trump tweeted that the meeting had been a "total waste of time" and reported that when House Speaker Nancy Pelosi (D-CA) told him that Democrats wouldn't approve border-wall funding, "I said bye-bye, nothing else works!" (Wall Street Journal, Jan. 10)
The effects of the government shutdown and prospects for policymaking in the new Congress will be topics for discussion during The Roundtable's Jan. 29-30 State of the Industry Meeting in Washington, DC.