A partial shutdown of the U.S. government could slash job growth by as much as 500,000 in January and lift the unemployment rate above four percent unless the impasse in Washington is resolved before next Friday, economists warned.
Some 800,000 government workers missed their first paycheck on Friday following the partial government shutdown. The chaos started on December 22 as President Donald Trump demanded from the U.S. Congress 5.7 billion U.S. dollars this year to help build a wall on the country’s border with Mexico.
The Labor Department, which has not been affected by the shutdown, surveys employers and households for its closely watched employment report, which includes nonfarm payrolls and the unemployment rate, during the week that includes the 12th of the month.
For this month, the pay period for most federal employees that includes the week of the 12th runs from January 6 to 19. About 380,000 workers have been furloughed, while the rest are working without pay.
Unless the government reopens next week, furloughed workers will probably be counted as unemployed, as they would not have received a salary during the pay period survey.
The economy created 312,000 jobs in December, the most in 10 months. Trump likes to boast about the strong labor market as one of his crown achievements. The shutdown, which on Friday tied the record for the longest in the nation’s history, could also drive up the unemployment rate in January.