Although the rich and the corporations have recovered from the recession (and are making record-breaking profits), most Americans have not -- and the economy as a whole is barely limping along. The last thing that was needed was a government shutdown. Most economists have predicted that shutting down the government would harm the economy by taking government money out of the economy (which would harm the sales of all kinds of businesses, and thus reduce overall GDP).Now there is evidence that the shutdown's harm to the American economy may be significantly larger than expected. That's because consumers, scared by the possible ramifications of the shutdown, have also reduced their own spending. A new ICSC / Goldman Poll (conducted between October 10th and 13th of 1,025 nationwide adults -- 505 men and 520 women) shows that at least 40% of the general population says they have reduced their spending as a result of the government shutdown.
And that reduced spending spans all income groups. While the lower income groups have reduced their spending the most, even a significant portion of the upper income group (those making more than $100,000 a year) has reduced spending (about 32%).
Making matters even worse, we are very close to entering the holiday season. Many American businesses, especially small businesses, just get by most of the year, and count on the holiday season for their profit. Reduced holiday spending could be disastrous for those businesses. If the shutdown was to end quickly, the spending might go up again and not affect the holiday season. But if the shutdown lasts longer, it could well mean a poor holiday buying season for business. And that could push our barely positive GDP back into negative territory -- perhaps even touching off a new recession (when most Americans are still struggling to cast off the effects of the last recession).
This shutdown has negatively affected the public's view of the Republican Party. And that is well deserved, since their actions in shutting down the government (and threatening to cause a government default) is hurting the economy (and therefore the well-being of many, if not most, Americans). The GOP is playing with fire, and that fire could burn us all.
