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Jan 8, 2019

Real Time Economics: How Long Can the Shutdown Last?

The Wall Street Journal.
Percentage logo.
Real Time Economics
The Trump administration is trying to ease the pain from a government shutdown entering its 18th day, though the task is getting more complicated. 
Good morning. Jeff Sparshott here to take you through the latest economic news, including U.S.-China trade talks, signs of slowing growth in Asia and Europe, a wait-and-see Fed, and Saudi Arabia's plan to pump up oil prices. Let us know what you think by replying to this email.
 

Shutdown Rundown

The Trump administration now says it will pay tax refunds during a shutdown. Future challenges: ensuring Transportation Security Administration staff show up to work, and paying for food stamps and federal housing.
Taxes: The Trump administration and its predecessors had said refunds couldn’t be paid while the IRS was shut because those payments weren’t necessary to protect life or government property. Switching that position makes it easier for the shutdown to continue without tens of millions of Americans clamoring for their money, Richard Rubin and Peter Nicholas report.
TSA: About 51,000 airport screeners are required to show up to work but aren't getting paid. Some have already been calling in sick at higher-than-normal rates. So far TSA says that hasn’t led to much longer waits or less security. But if the shutdown drags on, many workers may not be able to hold out for a check and could opt to search for new jobs, Alison Sider reports.
Payday: Hundreds of thousands of federal workers are planning to miss their first paycheck on Friday. About 420,000 employees are working without pay while 380,000 federal employees have been placed on unpaid leave. Real estate website Zillow estimates that unpaid federal workers owe $438 million in mortgage and rent payments alone this month.
Way out? President Trump will deliver a prime-time address and travel to the U.S. border with Mexico this week to make his case for a border wall—while also working privately with advisers to find a way out of the shutdown without losing face, Rebecca Ballhaus, Michael C. Bender and Peter Nicholas report.
Impact: Barclays economists Michael Gapen and Jonathan Millar estimate the shutdown knocks 0.1 percentage point off of GDP every two weeks. 

What to Watch Today

The Commerce Department's Bureau of Economic Analysis and Census Bureau are closed during the partial government shutdown, so international trade data for November won't be out Tuesday. Economists had expected the deficit to narrow to $54.2 billion from $55.49 billion a month earlier.
The Labor Department is funded, so we'll get November's job openings and labor turnover survey at 10 a.m. ET.
The Fed's consumer credit report for November is out at 3 p.m. ET.
President Trump delivers a speech on border security at 9 p.m. ET.