- Credit Risk
- Sovereign Debt
Shutdown becomes the longest in United States’ history
The shutdown that paralyzes some of the federal administrations of the United States (US) government has become the longest in the history of the country on the night of Friday January 11 to Saturday January 12, entering its 22nd day, exceeding the 21st of shutdown during the Clinton era in 1995-1996.
In Congress and Senate, no compromise is on the horizon; the consequences are very real. For the first time on Friday, the 800,000 federal employees affected by the shutdown did not receive their salary. Since December 22, half of them, considered "non-essential", have been placed on unpaid leave, while the other half have been requisitioned. If most, paid fortnight, had received their pay check in late December, they will not touch their pay this Friday.
The House of Representatives, however, overwhelmingly passed a law passed by the Senate on Friday January 11, guaranteeing federal employees that they will be paid retroactively once the shutdown is over. It is now up to the president to promulgate it. This type of measure is common in the United States when the country goes through such budget impasses. But it does not concern the millions of contract workers also affected.
Prolonged paralysis by the federal government would "have a noticeable effect" on the world's largest economy, warned US Central Bank chief Jerome Powell.
To be continued…
Julien Moussavi, Head of Economic Research
Sources: Beyond Ratings, Datastream