Having in recent weeks boosted his estimate for government shutdown odds to even, or 50%, in a note overnight from Goldman’s Jan Hatzius, the bank’s chief economists writes that due to the human tragedy from Hurricane Harvey, the odds of a shutdown have been again reduced, back to Goldman’s original estimate of 33%.
According to Hatzius, “recent events have lowered the odds of a government shutdown or a delayed debt ceiling hike but have also increased the number of possible scenarios, complicating the legislative outlook over the next couple of months. At this point, we peg the probability of a shutdown in early October at 35%, down from our prior view of 50% over the last couple of weeks.”
As Goldman explains, the main issue is Hurricane Harvey and the considerations are largely optical: “allowing a partial government shutdown when federal relief efforts are underway would pose greater political risks than under normal circumstances, raising the probability that lawmakers will find a way to resolve disagreements.” In addition, Hatzius predicts that over the next several weeks “Congress will probably need to appropriate additional disaster relief funds”, and Congressional leaders will be “apt to combine this with legislation to extend federal spending authority and/or raise the debt limit if possible.”
This post was published at Zero Hedge on Aug 30, 2017.
Follow on Twitter
Recent Comments