No recession yet, but US is definitely down in the deep Trump dumps

(Originally published Oct. 23 in “What in the World“) Economists warn the U.S. government shutdown is likely to pose an expanding toll on the economy the longer it continues.

Not only is Trump trying to lay off federal workers during the shutdown, but the government isn’t able to provide services that support private enterprise in the meantime. U.S. economic growth is likely to lose as much as 0.2 percentage points every week the shutdown persists—equivalent to $15.2 billion a week in lost GDP growth. That’s pretty much what U.S. Treasury Secretary Scott Bessent estimated a week ago.

Yet Trump refuses to even meet with rival Democrats to discuss the health subsidies at the center of the shutdown until they pass a funding bill that allows the government to re-open. Democrats have said they won’t pass a funding bill that doesn’t include those health subsidies. And there goes another $15 billion.

The result so far is an economy that feels like it’s in a recession, even though it technically isn’t. Paul Krugman does a good job explaining this in the latest post to his own newsletter. In summary:

• AI is booming, but the rest of the economy isn’t.
• Unemployment may not be rising, but companies aren’t hiring.
• The rich are getting richer, but the poor are getting poorer.