Janet Yellen says a government shutdown would add to risks of a recession

PO1 William "Chip" Nagel
..."A big fear is a government shutdown could tip the U.S. economy into a recession. "I don't want to predict that," Yellen said. "But I think it's a risk factor."

At his last news conference, following the Federal Reserve's last meeting, Fed Chair Jerome Powell said a potential shutdown was on "a long list" of headwinds facing the U.S. economy.

Powell and his colleagues have been raising interest rates rapidly to get high inflation under control. And while there's been more optimism the Fed will be able to do that, Powell and Yellen have both acknowledged the inherent difficulty of that undertaking.

In an exclusive interview with NPR, Yellen emphasized a government shutdown could have an effect on the level of confidence businesses and consumers have in the economy.

"If it seems like we're suffering from political paralysis — and this inability to keep the government open seems to be a symptom of that — there could be a psychological toll that it takes," she said.

A longtime government policymaker, Yellen has been in government during previous shutdowns. But, she said, the run-up to this potential shutdown seems different.

"The problem is a very small, extreme group of Republicans that are holding a continuing resolution hostage in the House," she said. "I haven't seen something like that before, that such a small group of people could inflict such damage on the American people and the American economy."

Economists have noted that the damage a shutdown can do depends in large part on how long it lasts. The last one, in 2018 and 2019, lasted more than a month."...

PO1 William "Chip" Nagel good day Brother William, always informational and of the most interesting. Thanks for sharing, have a blessed day!