The impending threat of a U.S. government shutdown could potentially disrupt the release of economic data, delay initial public offerings (IPOs) and mergers, and create uncertainty in the housing market, particularly in flood-prone areas, according to former Treasury official Ben Harris.
Harris warned on Friday about the potential impacts of a government shutdown. Among the concerns he raised were disruptions to key economic data releases. The availability of these data points is critical for market participants who rely on them for making informed decisions. A shutdown could delay or even prevent these releases, creating uncertainty and potentially affecting market dynamics.
Another area of concern is the potential impact on IPOs and mergers. Harris specifically mentioned Birkenstock’s upcoming transactions as one that could be affected by the shutdown. The process of going public or merging with another company often involves regulatory approvals and filings with government agencies, which could be delayed if those agencies are not fully operational.
Finally, Harris noted that the National Flood Insurance Program (NFIP) could face funding lapses due to the shutdown. This could instigate home buying uncertainty in flood-prone areas where homeowners rely on NFIP for insurance coverage. Without assurance of this coverage, potential homebuyers may hesitate or decide against purchasing homes in these areas.
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