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Partial government shutdown compounds risks for US economy

December 22, 2018
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The U.S. Capitol dome is seen past the base of the Washington Monument just before sunrise in Washington, Saturday, Dec. 22, 2018. Hundreds of thousands of federal workers faced a partial government shutdown early Saturday after Democrats refused to meet President Donald Trump's demands for $5 billion to start erecting a border wall with Mexico. Overall, more than 800,000 federal employees would see their jobs disrupted, including more than half who would be forced to continue working without pay. (AP Photo/Carolyn Kaster)

WASHINGTON (AP) — Now in its 10th year, America’s economic expansion still looks sturdy. Yet the partial shutdown of the government that began Saturday has added another threat to a growing list of risks.

The stock market’s persistent fall, growing chaos in the Trump administration, higher interest rates, a U.S.-China trade war and a global slowdown have combined to elevate the perils for the economy.

Gregory Daco, chief U.S. economist at Oxford Economics, said he thinks the underlying fundamentals for growth remain strong and that the expansion will continue. But he cautioned that the falling stock market reflects multiple hazards that can feed on themselves.

“What really matters is how people perceive these headwinds — and right now markets and investors perceive them as leading us into a recessionary environment,” Daco said.

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