U.S. government shutdown may yield a recession: Scaramucci

NEW YORK (Reuters) – The U.S. government’s partial shutdown might be enough to tip America’s economy into recession if it runs longer than another month, a former White House aide said on Thursday.

Chelsea Higbee (R), the wife of a member of the U.S. Coast Guard working without pay during the government shutdown, picks up produce, eggs, milk, bread and other supplies being distributed by Gather food pantry at the U.S. Coast Guard Portsmouth Harbor base in New Castle, New Hampshire, U.S., January 23, 2019. REUTERS/Brian Snyder

SkyBridge founder and co-managing partner Anthony Scaramucci, who was the president’s communications chief for 10 days in 2017, said in an interview in the Reuters Global Markets Forum that the disruption now in its 34th day, also weighed on the president’s prospects for re-election in two years.

Economist at J.P. Morgan on Thursday reduced their estimate of first quarter U.S. economic growth to 1.75 percent from 2 percent because of the shutdown.

The following are excerpts from the LiveChat at the World Economic Forum in Davos with Scaramucci:

Question: Do you see economic fallout from the shutdown. Is it enough to push the U.S. economy into recession?

Answer: (The government disruption) will lead to slower growth this year globally. It is not significant enough but, if it lasts longer than another month, it will be.

Q: If the dispute between the Democrats and the president is resolved soon, what are your expectations for the U.S. economy?

A: Low risk of recession (during) 2019, but goes up in mid-2020.

Q: Are you making any changes in your portfolios at Skybridge because of the prospects of recession?

A: No change to our portfolio.

Q: Politically speaking, is the shutdown a political plus or minus for the president?

A: A-minus … They are in a Gordian knot with both sides having no face-saving way out.

Q: What are the odds of the president being re-elected?

A: 60/40. 60 to get re-elected.

Q: Do you have any contact with the president these days? Do you have any informal role?

A: Speak to him once a month. No formal role.

Reporting by Michael Connor in New York, Divya Chowdhury in Davos and Parikshit Mishra in Bengaluru; Editing by Alistair Bell

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