Shutdowns are back—and Gene delves into the reasons, ramifications, and rhetoric. This episode examines the latest U.S. government shutdown, its potential to outlast previous ones, and whether it could signal deeper structural changes—or just more political theatre.

Gene would love to hear your thoughts on this episode. You can email him via [email protected]. 

Timestamps

• US Government Shutdown Overview (0:00)
• Political Causes and Consequences (2:47)
• Impact on Federal Workers and Services (6:44)
• Economic and Financial Implications (10:22)
• Data Blackout and Market Trust (19:25)
• Political Dynamics and Potential Resolutions (21:07)
• Potential Long-Term Economic and Market Impacts (23:38)
• Call for Public Input and Conclusion (24:02)

Takeaways

1. The shutdown has happened due to a failed continuing resolution, not the debt ceiling—this time, it’s a clash over health insurance subsidies and spending on undocumented immigrants.
2. Shutdowns rarely alter the long-term trend in government spending, as federal outlays tend to rebound after the shutdown ends.
3. Federal workers often get back pay, but contractors do not—highlighting real economic pain for many.
4. Economic impact is limited and short-term, though the longer this drags on, the greater the potential for serious consequences.
5. This shutdown might be different, as political polarisation has deepened and there are hints of a broader agenda to shrink government permanently.

Links relevant to the conversation

CBO report on the 2019 shutdown:

https://www.cbo.gov/publication/54937

CBS News report “Who gets back pay and who doesn't after a government shutdown?”

https://www.cbsnews.com/news/government-shutdown-contract-worker-back-pay/

David Wessel’s Brookings article “What is a government shutdown?”:

https://www.brookings.edu/articles/what-is-a-government-shutdown-and-why-are-we-likely-to-have-another-one/

J.P. Morgan note “How does a potential U.S. government shutdown impact markets?”:

https://am.jpmorgan.com/au/en/asset-management/adv/insights/market-insights/market-updates/on-the-minds-of-investors/how-does-us-government-shutdown-impact-markets/

Emily Jashinsky’s video “Democrats LOSE IT over sombrero meme as Trump Unleashes 'Doge 2.0'”

https://youtu.be/JQCg-NuTAYI?si=s7eS7VgBH43Ab8VD

Bernie Sanders and AOC video on the shutdown:

https://youtu.be/fqWsPk7QO24?si=1RBjjEQogMMoLCzr

Relevant previous Economics Explored episodes:

Debt, Inflation & Unrest: Western Warnings - ep297

https://economics-explained.simplecast.com/episodes/debt-inflation-unrest-western-warnings-ep297

US Debt Ceiling: Why Trump is Right to Call for its Abolition & Gene’s Experience with Aussie Debt Ceiling - EP268

https://economics-explained.simplecast.com/episodes/us-debt-ceiling-why-trump-is-right-to-call-for-its-abolition-genes-experience-with-aussie-debt-ceiling-ep268

Is Uncle Sam Running a Ponzi Scheme with the National Debt? w/ Dr Dan Mitchell - EP235

https://economics-explained.simplecast.com/episodes/is-uncle-sam-running-a-ponzi-scheme-with-the-national-debt-w-dr-dan-mitchell-ep235

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