What The Government Shutdown Means For Your Wallet

The Federal Government shutdown today.  St. Cloud State Economist King Banaian joined me on WJON to evaluate the potential economic impact of a shutout.  He says it depends on how long it lasts.  Banaian believes a 10-day shutdown could have some impact on GDP (Gross Domestic Product).  He says typically furloughed workers get back pay for the days that were missed because they'll need to do extra work to get caught up when they return.

Impact of a Long Shutdown

There was a 35-day shutdown at the end of 2018.  Banaian says it didn't cause a recession, the unemployment rate went up 1% to 2% in the month or two after.  He says that would be really long and he doesn't expects this shutdown to last that long.  Banaian indicates the Federal Reserve is data dependent and with the Government shutdown there won't be a jobs report.  He says if this is a long shutdown it could make it difficult for the Federal Reserve to know what direction they should go.

Soybeans

It has been reported my numerous outlets that Minnesota soybean farmers aren't getting the expected buy from China this year, instead China bought more soybeans from South America.  Banaian predicts China will need to buy U.S. soybeans in the winter.  He says the harvest in the southern hemisphere happens the opposite of the northern hemisphere so he feels China wasn't buying soybeans from U.S. farmers this time of year anyway.  Banaian says Minnesota farmers may not be out of the woods even if a buy from China happens due to current trade policy.

Recession?

Two months in a row the United States has seen a drop in employment.  Banaian says despite that, he doesn't foresee a recession anytime soon.  He says there are some signs of recession but some signs of no recession.  Banaian indicates business leaders feel things are going to be good based on their behavior and he feels recession won't happen for at least 6-8 months.

If you'd like to listen to my conversation with King Banaian, click below.