US shutdown: Four reasons why Trump blinked
https://www.bbc.com/news/business-46994099
US shutdown: Four reasons why Trump blinked
25 January 2019
President Donald Trump's decision to endorse a deal to reopen the federal government for three weeks on Friday came amid mounting pressure to end the impasse.
Here are four reasons from the business world why the White House blinked.
1. The travel industry was stressed.
Delays at major airports on Friday brought to a head issues that had been affecting airports for weeks. The issues were blamed on staff shortages, as air traffic controllers and screening officers - who have been working without pay since the start of the shutdown in December - failed to report for duty. Among Transportation Security Administration officers, unexpected absences had more than doubled from a year ago, to more than 7%, with many citing "financial limitations", according to the agency.
Meanwhile, airline executives had warned that a fall in government business, as well as wider concerns about travel, were affecting bookings. Southwest, for example, estimated that the shutdown cost $10m-$15m (£7.6m-£11.4m) in January revenue. It also said it was forced to postpone a new service to Hawaii.
2. Washington was reeling.
The 800,000 federal workers affected by the shutdown might have been able to absorb one missed pay cheque. But a second one starts to hurt - especially in a country where an estimated 40% of adults don't have funds to cover an unexpected $400 expense.
In the Washington region, where an estimated one in six workers was affected, the shutdown could have shaved 2.5% off the region's quarterly economic growth if it lasted through March, according to Frederick Treyz, chief economist for Regional Economic Models Inc. That's in an area that expanded 2.1% in 2017.
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3. The Fed and others were 'flying blind'.
The shutdown coincided with a critical time for the economy, as conflicting economic signals aggravate debates about how much higher the Federal Reserve should raise interest rates this year. Mr Trump has repeatedly criticised the Fed, warning against a misstep.
But wider fears of a policy error were growing, as the impasse halted the release of closely watched statistics, including gross domestic product (GDP), retail sales and housing starts. "The US economy is flying blind," Robert Shapiro, the chairman of Sonecon LLC, wrote for Brookings Institution this week. "The fact that reliable measures of recent GDP and its components are unavailable can only generate more economic uncertainty as well as wrong business decisions."
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4. More pain was about to appear.
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