While a government shutdown was averted last weekend, thus saving the economy from nothing, avoidance didn’t happen in time to save economists from themselves. Talking to the New York Times about the potential for a shutdown, EY-Parthenon chief economist Gregory Daco observed that while the latter wouldn’t be a “game changer,” a lengthy closing of the federal government’s doors could “become a significant drag” on the economy. What could Daco possibly mean?
Lest he forget, government has no spending power other than what it extracts from the private sector first.
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