Is the Economy Shutting Down Over the Shutdown?
The government shutdown, while past, is still an open wound for Wall Street. Let’s take a look at damage. Perhaps the sorest spot is its 37 percent decrease in yearly profits, a result of legal cost, rising interest, and the budget fight going on in Washington reports New York State Comptroller Thomas DiNapoli, according to Bloomberg.
“The political gridlock in Washington may take a bite out of the securities industry’s profits for the fourth quarter. Washington’s inability to resolve budget and fiscal issues is bad for business,” said DiNapoli, citing a probably drop in earnings — down to $15 billion this year compared to $23.9 billion last year. Ruth Porat, the chief financial officer at Morgan Stanley (NYSE:MS) agreed that damage has clearly resulted from the shutdown.
“The impasse in Washington over the last several weeks was an unfortunate tax on the economy,” she said, adding that growth and “broader market activity” would pick back up again now that the standoff in Congress has been temporarily solved. In a speech closely following the reopening of the government on October 17, Obama too commented on the economic damage. “At a moment when our economic recovery demands more jobs, more momentum, we’ve got yet another self-inflicted crisis that set our economy back,” said the president.