Concerns are already high as the Federal Reserve walks a careful line in efforts to tamp down inflation.
Experts are now worried the political dysfunction behind former Speaker Kevin McCarthy’s (R-Calif.) ouster poses new risks.
Skyrocketing bond yields and turmoil in oil markets are also drumming up fears of a recession, giving investors plenty to worry about in the months ahead.
“Yields and oil are the big stories. Those have the biggest economic consequences. And they’re coming at a time when the economy’s especially fragile,” said Callie Cox, U.S. investment analyst at eToro.
“But these political headlines aren’t helping things and they probably are making investors more jittery, even though the economic impacts are likely to be more limited.”
While most government shutdowns have little direct economic impact, experts are concerned a shutdown could shake consumer confidence.
“We’ve seen big drops in consumer confidence in some of the most recent shutdowns, and at a time like this — where consumers have a lot to think about — that drop in confidence can have a real effect on spending,” Cox said.
It could be weeks before House Republicans elect a new speaker, and there is no guarantee they will do so before the Nov. 17 government funding deadline.
Until then Rep. Patrick McHenry (R-N.C.), the chairman of the House Financial Services Committee, will serve as speaker pro tempore.
The Hill’s Sylvan Lane and Julia Shapero have more here.
