Most analysts believe that the government remaining shut down through this week would only slight harm the broader economy. With most of the Department of Defense's workers heading back to work, Goldman Sachs estimates that the effect of the government shutdown on the nation's gross domestic product will be negative 0.2 to 0.14 percentage points per week. Most of that damage is an accounting loss reflecting a hit to federal workers' pay rather than problems in the broader economy.
It's widely believed that a longer shutdown that extended beyond a few weeks would begin to seriously threaten the recovery as the need for government services became more urgent. Before that point comes, however, will be the deadline for raising the debt limit -- identified as someday after Oct. 17 by the Treasury Department.
In the meantime, the most dangerous threat to the economy is that consumers will become so worried about the government's failure to operate that they'll rein in their spending or, relatedly, that businesses will become so uncertain about what will happen in the weeks ahead that they'll stop investing in their companies.
One more immediate problem caused by the government shutdown will be the missing economic data that is normally supplied by the federal government. Already, there's been a skipped jobs report -- the biggest indicator of all. If the agencies aren't funded this week, investors and officials will miss data relating to trade, hiring and layoffs, imports and exports, retail sales, inflation, and business' inventories. That's a lot of information about broad swaths of the U.S. economy that would remain unknown.
One major event that could come this week is the nomination of the successor to Ben Bernanke as the chairman of the Federal Reserve, expected to be the current vice chair, Janet Yellen. Last Thursday, Obama economic adviser Jason Furman would only say that the nomination wouldn't come that week in an interview with the Wall Street Journal.
But even if the Fed nominee isn’t announced this week, there still will be new information about where monetary policy is headed. The minutes from the September Fed meeting, which ended with a surprise decision not to slow down the pace of the Fed’s stimulus purchases, will be released on Wednesday afternoon, and could provide insight into how Fed officials think about the future of their efforts to ease monetary conditions.