The government shutdown sabotaged a crucial month of data and dealt a blow to the world’s largest economy but the US Federal Reserve could still begin reducing its asset purchases as early as December.
Analysts have slashed growth forecasts for the fourth quarter to 2 per cent or below with many expecting a hit of about 0.5 percentage points from the prolonged shutdown. But many said the economy would bounce back quickly with federal employees back at work.
The shutdown has left the US counting the cost to its reputation for competent economic policy, but unless there is a sustained shock to business and consumer confidence from further fiscal warfare, the effects on growth in 2014 and Fed policy will be small.