White House Adviser: Shutdown Impact Exceeds Expectations

White House adviser Kevin Hassett has issued a stark warning about the effects of the ongoing government shutdown, which is proving to have a more severe impact than anticipated. As the shutdown enters its 39th day, he expressed concerns about its consequences on the airline industry and broader economic indicators.

Shutdown Effects on the Economy

Hassett, who leads the National Economic Council, shared his insights during an interview with Fox News. He emphasized that the extended duration of the shutdown is a primary factor in its heightened impact. According to Hassett, the U.S. GDP growth for the fourth quarter is now projected to be only 1.5%, significantly lower than the previously estimated 3%.

Concerns Over the Airline Industry

Hassett indicated that if disruptions in air travel persist for another week or two, the airline sector could experience a near-term downturn. He cited this trend as a reflection of broader economic challenges amidst the prolonged shutdown, which is now the longest in U.S. history.

Labor Market Challenges

The adviser noted signs of a slowdown in both the job market and construction sectors, stating, “We’re starting to see pockets of the economy that look like they’re in a recession.” This assessment echoes concerns raised earlier by Treasury Secretary Scott Bessent.

Public Sentiment and Interest Rates

Consumer sentiment has also deteriorated. The latest University of Michigan survey reported a consumer sentiment index of 50.3, marking a three-year low. This figure is a drop from 53.6 in October and approaches the all-time low of 50 recorded in June 2022.

Hassett expressed disappointment over the Federal Reserve’s recent statements, which suggested that interest rate cuts might not occur in December as initially expected. He argued that the current shutdown conditions should prompt the Fed to reconsider its stance on interest rate adjustments.

Potential Long-Term Implications

• The ongoing government shutdown is affecting consumer confidence.
• Air travel disruptions may signal a downturn in the airline industry.
• Economic growth projections have been significantly downgraded.
• The shutdown may deter future federal workforce participation.

In summary, the impact of the government shutdown is being felt across multiple sectors, with potential long-term effects on the economy and workforce. Hassett remains hopeful that once the government reopens, recovery can begin swiftly.