Millions of U.S. government employees across the country are bracing for their pay to stop indefinitely at the end of the month, as House Republicans on Thursday were unable to reach a compromise within their ranks over a new budget and Congress careens toward a government shutdown, NBC News has reported.
“Unless Congress acts, the federal government will not be able to pay its 4 million employees after Sept. 30,” said the report on Sunday. “The shutdown comes at a particularly precarious time for many households already struggling with persistent inflation that has driven up the cost of rent, child care, groceries, transportation and utilities.”
While unemployment has remained historically low, economists said a government shutdown lasting beyond a month combined with an expanding auto workers’ strike and pressure on consumers from inflation and higher interest rates could weigh down the wider U.S. economy, the report added.
If a shutdown were to last through the end of the year, that could be enough to tip the U.S. into a recession, said Mark Zandi, chief economist at Moody’s Analytics.
“A couple weeks, no big deal. A month, then it starts showing up with the economic data. Longer than that, it becomes a real problem and if it’s for the entire quarter, buckle in, it probably means a recession,” he said.