US shutdown could cause new recession

Experts predict that if the US government is forced to shutdown the US economic recovery would be devastated a second recession as Americans lose confidence.

The government is poised yet again for shutdown if American lawmakers are unable to reach an agreement on a bill to fund the government by April 8. If an agreement is not met, a vast mix of federal programs will simply halt all operations.

The last major US shutdown occurred in 1995 and lead to a termination in health and social services, court cases and legal proceedings were delayed, and federal employees faced rolling furloughs.

This time, it could be worse. Many fear in addition to the impacts seen in 1995, more low-income programs will be affected, possible impacting the economic recovery and destroying American confidence in the markets - creating another recession.

Currently Americans are enduring high unemployment, rising prices and an ongoing housing crisis. Additional strains could break the backs of American further. A prolonged federal shutdown could prove detrimental.

"Confidence is already very, very fragile," Mark Zandi, chief economist of Moody`s Analytics told The Huffington Post. "A very short shutdown would be manageable, but the damage that it would do to the confidence in the economy would quickly mount with each passing day."

Any stint beyond two weeks would bring the US back into a recession, he argued.

Lawmakers are bickering over spending cuts, with Republican law makers calling for massive cuts to save the government money and reduce the deficit. Meanwhile Democrats are willing to make some cuts, but desire far fewer than the Republicans. They have yet to reach a deal and signs are not promising.

If the two cannot come to an agreement the US may find itself in harder times that it already is, with a new recession, a new war in Libya, ongoing wars in Afghanistan, Iraq and Pakistan and damages from natural disasters all on a single plate.

sections: World News