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Hard times in U.S. as economy starts to shut down

NewsHard times in U.S. as economy starts to shut down

Some institutions have cut their growth outlooks for the American economy.

 

Washington DC: Entering the 28th day on Friday, America continues to feel the pain of the longest ever government shutdown and with no political resolve in sight, it only threatens to get worse and give its citizens nightmares.

Politically, it has started to get worse, with President Donald Trump cancelling his World Economic Forum visit to Davos and postponing House Speaker Nancy Pelosi’s trip to Brussels, Egypt and Afghanistan, escalating a war of words with the latter.

Later, he moved on Friday to limit travel by Congress members during the partial shutdown by barring them from using government planes without prior written approval.

A bitter political divide has set in, hinting at no resolve to this logjam.

While much has been in the public domain—about the unpaid 800,000 Federal workers, tourism taking a hit at museums and national parks, about many departments facing closure or having closed shutters and a large section of American citizenry not being able to avail the public benefits due to the shutdown; one surprise casualty—many marriages have been hanging fire, as these could not be certified!

Worse, these apart, now think-tank experts and media have started to look ahead and fear “long-term pains”, including a spiral effect on low-income households, investment scenario and the country’s overall economic growth rate taking a dip in the end.

An opinion poll in the New York Times said that the government shutdown and a late-year slump in the stock market have eroded Americans’ optimism for the economy and support for President Trump’s economic policies. “The decline in confidence is widespread—among Democrats and Republicans, high and low earners—and it suggests mounting danger for Mr. Trump and the economic expansion that he claims as a strong point of his presidency. Sustained drops in confidence often signal dampened consumer spending in the months ahead, and can be the precursor to broader economic downturns,” the NYT survey wrote.

Washington DC-based Center for American Progress (CAP), a leading think-tank, has come out with a report reflecting on “long-term effects of the shutdown on low-income families”.

Talking to The Sunday Guardian, Donovan Hicks, CAP’s research associate and lead author of the report said: “President Donald Trump recently claimed that he can relate to the strain experienced by federal workers living paycheque-to-paycheque. However, his efforts to prolong the current government shutdown—already the longest in US history—suggest otherwise. In addition to furloughed federal workers, this cruel, manufactured crisis has added immeasurable uncertainty to already stressed low-wage workers and families, disproportionately harming low-income families with children, people with disabilities, and seniors.”

Worse, says Hicks: “The credit ratings of these low-income families who plan the month according to their wages have already got into jeopardy, with salaries and wages getting affected.”

(L-R) Donovan Hicks and Sarah Pierce.

The CAP report says “what’s even more concerning is that public safety is being compromised”. Says Hicks: “As the shutdown persists, a number of domestic violence programs are preparing to curtail services as funding dries up. On a single day, over 70,000 survivors access lifesaving services from domestic violence programs across the country. A significant portion of domestic violence and sexual assault programs heavily rely on federal funds granted through the Violence Against Women Act (VAWA) and Victims of Crime Act (VOCA). The Office on Violence Against Women (OVW) and the Office on Victims of Crime (OVC) at the US Department of Justice (DOJ) administer these funds to provide access to safety and justice. Domestic violence programs also rely on funding from the US Department of Housing and Urban Development (HUD).”

He said, while the HUD continues to distribute funds, some organisations report that they have not been able to access funds during the shutdown. “Without such funds, survivor housing could be in jeopardy. These resources are particularly important for Americans with disabilities,” Hicks told this newspaper.

Even on the immigrant front, there is a cause for worry, says Sarah Pierce of Migration Policy Institute (MPI), another top think-tank in Washington DC.

Talking to The Sunday Guardian, Pierce, a policy analyst at MPI, said: “The agencies and operations related to legal immigrants are fee-funded. There are three programs within the US immigration agency (USCIS) that are not operational because they are tied to the funding bills—the EB-5 Immigrant Investor Regional Center Program, Conrad 30 program for J-1 doctors, and the program for non-minister religious workers. Any immigrants who were interested in participating in these will unfortunately be unable to do so until the government reopens.”

She said that two components of the US immigration enforcement regime are not functioning: non-detained immigration courts and E-Verify. “Immigration courts are only moving forward with cases if the immigrant is detained and has cancelled tens of thousands of hearings of other immigrants who are not currently in detention. E-Verify, the system through which employers can check the employment authorisation of their employees, is not operational. This creates an awkward problem for employers working in states that mandate such checks,” Pierce told The Sunday Guardian.

It has already started to pinch corporates and CEOs are out talking about “a possible slump and a depressing investment scenario, forcing a low growth rate for America”. Separately, some institutions have cut their growth outlooks for the US economy. In a recent statement, JPMorgan Chase CEO Jamie Dimon said: “The government shutdown could flatten the country’s economic growth…Someone estimated that if it goes on for the whole quarter, it can reduce the growth to zero. We just have to deal with that. It’s more of a political issue than anything else.”

Hard times ahead for America and Americans as Prez Trump refuses to budge and Democrats are in no relenting mood either!

 

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