The United States is on the verge of a shutdown: Trump risks provoking an economic downturn

On December 17, the leaders of the US Congress presented an initiative to extend funding, allowing the government to work until March 14, 2025. The proposal also provides for more than $100 billion in disaster relief and support for the agricultural sector. 

The remaining two days before the end of US government funding increase the likelihood of its termination. Uncertainty remains high after Donald Trump expressed disagreement with the proposed spending bill and demanded an increase in the debt limit.

Nevertheless, analysts emphasize that Trump supports key aspects of the bill, which inspires hope for a compromise before the deadline. If no agreement is reached, Republicans can propose a short-term «clean» funding extension to avoid a shutdown, but this will postpone the resolution of important issues until early 2025.

Debt ceiling issues also remain relevant. Although the suspension of the debt limit expires on January 2, 2025, the Treasury will be able to continue borrowing until the third quarter. At the same time, each week of government shutdown can reduce quarterly GDP growth by 0.15%, but after that the economy usually shows a similar recovery.