Economists worry about impact of US govt shutdown

[WASHINGTON] A prolonged government shutdown - followed by a potential default on the federal debt - would have economic ripple effects far beyond Washington, upending financial markets, sending the unemployment rate higher and slowing already tepid growth, according to a wide range of economists.

A shutdown of a few days might do little damage, but economists, lawmakers and analysts are increasingly bracing for a shutdown that could last for a week or more, given the distance between the two political parties. Such an outcome will suck money out of the economy and spread anxiety among consumers and businesses in a way that is likely to hold back economic activity.

And a default on the federal debt, which may occur within 30 days without congressional action, would be much worse, economists say. Failing to raise the debt ceiling would require the government to cut spending by about a third, potentially forcing delays in Social Security cheques, military pay and payments to doctors.