Key Takeaways
- •US shutdown may affect growth, Fitch says.
- •Slight economic impact in the near term.
- •Highlights fiscal policy challenges.
Fitch Ratings predicts a prolonged U.S. government shutdown may only slightly slow economic growth in the short term. Their analysis highlights the stability of the U.S. dollar and existing fiscal policies as factors limiting immediate impact.
Fitch Ratings reports that while the shutdown may slow growth, its near-term impact is expected to be minimal due to the dollar's established status.
The US government shutdown, starting after Congress missed the October 1 deadline, could lead to minor economic slowdowns, according to Fitch Ratings. Established US dollar status and fiscal frameworks are expected to limit immediate economic effects.
Fitch Ratings recently lowered the US rating to AA+ from AAA, citing long-standing budgetary challenges. Federal employees might experience temporary furloughs, although historically salaries are repaid once appropriations resume.
US Congress has yet to pass crucial bills, impacting federal operations and employees. Despite being in the early days of the shutdown, economic analysts expect relative market stability in the short term, supported by fiscal frameworks.
The shutdown reflects deeper political brinkmanship and budget policy gaps. According to Fitch Ratings:
"The U.S. government shutdown does not have near-term implications for the ‘AA+’/Stable U.S. sovereign rating but highlights long-standing policymaking weaknesses and political brinkmanship around budgetary issues."
Although not immediately impacting sovereign ratings, these political dynamics could affect future economic flows and growth predictions.
No direct crypto market effects are reported, as digital assets continue stable trading. Previous instances show shutdowns lead to increased risk perception, influencing safe-haven assets like BTC and the US dollar.
Historical shutdown trends suggest minor crypto fluctuations due to macroeconomic uncertainties. BTC and ETH volumes may rise slightly as investors seek safety. Stablecoins can provide liquidity, capital preservation, and hedge uncertainty, historically important during market volatility.