US economy suffers due to budget impasse

VTV.vn - The budget impasse has caused the US government to temporarily shut down for more than two weeks, but the economy is still recovering thanks to private investment and new technology.

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Budget deadlock threatens US economic recovery

The prolonged budget impasse in the US Congress has forced the federal government to partially shut down for more than two weeks, causing significant damage to the world's largest economy. Many experts estimate the disruption is costing the US about $15 billion a day in lost output – a figure that reflects the enormous cost of political disagreement.

Speaking at the annual meetings of the International Monetary Fund (IMF) and the World Bank (WB) on October 15 in Washington, US Treasury Secretary Scott Bessent warned that the shutdown is slowing growth and undermining investment confidence.

While the economy remains on solid footing thanks to private investment and a wave of new technologies like artificial intelligence (AI), “a lack of budget consensus is holding back growth,” he said. Thousands of infrastructure and research projects have been put on hold, while business sentiment has plummeted.

Some financial institutions believe the actual damage may be lower, around $15 billion per week, but all agree that the prolonged deadlock is creating great risks for the investment environment and macro-policy management in the US.

Widespread influence and policy pressure

The impact of the government shutdown is widespread. With Congress yet to pass a temporary spending bill, dozens of federal agencies have had to cut or suspend operations, slowing permitting, inspections and the release of economic data.

Agencies affected include the Commerce Department, Customs, Immigration and Customs Enforcement, and many import-export agencies. The disruption of inflation, employment, and housing data has left monetary policy in a "data-starved" state. Federal Reserve Chairman Jerome Powell has warned that this could reduce the flexibility in interest rate decisions.

International trade activities also face obstacles when the process of granting import-export licenses and foreign labor records is prolonged, increasing costs and time for businesses.

The impact extends beyond lost production to market sentiment. Many technology, energy, and manufacturing companies have postponed new projects due to delays in approvals, causing foreign direct investment (FDI) into the US to stagnate. Some companies are considering shifting to regions with more stable political environments to ensure progress.

Regarding labor, about 4,000 federal employees have been temporarily laid off, and hundreds of thousands of others are working in a "waiting for the budget" situation. This directly affects household consumption and the recovery of the labor market in the fourth quarter of 2025.

The lack of regular economic reports has forced the Fed and policymakers to rely on old data, reducing their ability to respond to new fluctuations. Meanwhile, US inflation remains around 2.9% and growth shows signs of slowing – a context that requires more accurate and up-to-date data than ever.

International investors are closely monitoring the situation in Washington, concerned that if the deadlock continues, confidence in the US's fiscal management capacity will be damaged – a factor that has been the foundation for the position of the US dollar and global financial markets.

"Previous government shutdowns have had a short-term impact, but 2025 could be an exception as the US economy adjusts to a prolonged cycle of interest rate hikes. Any disruption could amplify uncertainty," said Professor David Elliott of George Washington University.

The fiscal picture

According to the IMF, the US budget deficit is now at more than 7% of GDP – the highest among developed economies. The cost of paying public debt interest has exceeded 1,200 billion USD, equivalent to the total expenditure of the Department of Defense and the Department of Education combined.

This poses a difficult problem for the US government: it must maintain spending to support growth while controlling escalating public debt.

Secretary Scott Bessent said the US needed to move towards a balanced growth model, boosting productivity alongside fiscal discipline. However, he acknowledged that reaching consensus was a major challenge as the presidential election approached, making any budget deal politically sensitive.

Still, Mr. Bessent expressed confidence in the long-term resilience of the U.S. economy. Technology companies, especially in the fields of AI and clean energy, have maintained long-term investment plans, expressing expectations for a more stable environment once the budget crisis is resolved.

Observers say the budget impasse is an important test of the White House and Congress’ ability to reconcile interests. If an agreement is reached soon, the US can limit economic damage, strengthen market confidence and maintain its position as a global financial center.

Conversely, a prolonged scenario could undermine Washington’s credibility, negatively impacting labor markets, investment, and monetary policy. With the world looking to the US to lead the global recovery, restoring the smooth functioning of the government is seen as an urgent task – not only for economic reasons, but also for national prestige.

Source: https://vtv.vn/kinh-te-my-chiu-ton-that-vi-be-tac-ngan-sach-10025101623361496.htm