US shutdown will force Fed to change its plans

US shutdown will force Fed to change its plans

The reading of minutes from Fed’s last meeting led to conclude that the first cuttings on assets purchases ($85 billion/month) would take place before the end of 2013. Now, after the governmental shutdown and the threat of a suspension of payments, most experts take it for granted that the Fed’s program will be delayed until the first months of 2014. Thus, the whole “bummer” will fall into Janet Yellen’s hands, the new president.

According to Goldman Sachs, American GDP growth will diminish to 0.3% in the fourth quarter of 2013, to which another 0.2% should be added due to the uncertainties that are already affecting consumption decisions. In total, half point that could leave US 2013 GDP in a meagre advance of 2%.

So far, the political row in the US only penalized the dollar and wasn’t even noticed in Wall Street. Now, Dow Jones is feeling the investors’ nervousness and it registers losses.

Will it go any further? According to recent surveys by the leading American media, 80% of analysts and investors believe that there will be a last minute agreement to raise the debt ceiling, so that the US government will avoid the suspension of payments. Let’s hope that these experts are right -for the global economy’s sake.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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