US Government Shutdown, French Budget: Two Interconnected Uncertainty Crises
The United States has just emerged from the longest government shutdown in its history—43 days of paralysis that prevented the release of numerous key economic data. In France, the budgetary debate is taking place in an unprecedented climate of instability, marked by a "protean" budget designed to maintain political standing rather than to strengthen the trajectory of public finances. Two countries, two contexts, but a common underlying theme: uncertainty is becoming a macroeconomic factor in its own right.
When Administrative Uncertainty Becomes an Economic Risk
On November 12, the United States ended the longest shutdown in its contemporary history. This is a temporary suspension, effective until January 30 for certain sectors, likely eased by the approach of Thanksgiving. However, this interlude is far from trivial: for 43 days, the federal administration did not release several essential data points needed to analyze the American economy. The GDP figures for the third quarter, September consumption data, and employment statistics for the last two months are simply missing.
This lack of data makes a precise assessment of the economic situation impossible. Nevertheless, the Congressional Budget Office (CBO) estimates that the shutdown could slash fourth-quarter growth by 1 to 2 annualized points. The impact arises from a dual contraction: on one hand, reduced public spending is mechanically cut back; on the other hand, household consumption decreases due to the temporary interruption of their income. During the previous record shutdown in January 2019, nearly $3 billion were deemed permanently lost—there was no resumption of activity once public services reopened.
While economists remain cautious, they believe that most of the damage observed this time should be reversible. An essential condition remains: quickly obtaining the missing data. The latest available information suggests a publication by the end of November, but the October data may be incomplete due to the lack of collection during the shutdown.
This uncertainty has not, in the short term, frightened the US financial markets—protected by their bullish momentum—but it weighs on macroeconomic analysis and complicates monetary policy decisions. Without reliable data, it's difficult to determine whether the Fed is ahead, behind, or right on track.
When France Prioritizes Political Stability Over Fiscal Coherence
Reflecting the American situation, France is experiencing a different form of uncertainty. Here, it is not the administration that is causing a standstill, but constantly adjusting politics. The country is experimenting with a new way to produce the budget: lacking a clear majority, the government seeks to build a shifting compromise, resulting in what is described as a « protean » text. The primary goal appears to be political stability, even if it means that the budgetary path is shaped by successive concessions.
An OECD study, cited in the document, shows that economic uncertainty is already costing the French economy dearly. The current fiscal climate compounds this: decisions are made without a structured vision, especially concerning a potential tax on assets considered « unproductive. » Such a measure, targeting euro funds, would effectively tax... the French debt held by households—since about 70% of euro fund assets are invested in French government bonds.
The fiscal debate thus takes precedence over the political debate, which is rare. The situation is all the more paradoxical as, meanwhile, financial markets remain surprisingly calm: the 10-year OAT-Bund spread has narrowed, and the CAC40 reached a new high on November 13th. This indicates a temporary disconnect between the political context and investor perception.
This apparent calm could, however, be misleading. As the United States delays the publication of its statistics, markets could enter a phase of increased volatility. Tech stocks, already sensitive to interest rates, might be the first affected—and gold, which is « showing signs of life » according to the document, already signals a slight resurgence in risk aversion.
Two countries, two systems... a shared vulnerability
At first glance, the American shutdown and French budget adjustments seem completely different. However, both situations share a common characteristic: uncertainty now weighs as heavily as the facts. In the United States, the absence of data renders the economy invisible. In France, the proliferation of tax hypotheses makes the budgetary trajectory unreadable.
In both cases, the economy is reacting less to the numbers themselves than to the fog surrounding them. And in both instances, the markets seem to have chosen to ignore this discomfort—for now. The gradual return of American data, debates in the French Senate over the budget, and persistent tensions affecting growth stocks could rapidly shift the situation.
The end of the shutdown does not mean the end of American problems, nor does passing the budget signal the end of French concerns. In a world where advanced economies are sensitive to the slightest signal, uncertainty has become an economic player in its own right.
This content has been automatically translated using artificial intelligence. While we strive for accuracy, some nuances may differ from the original French version.
