In a News Item of 1 October, Over the Cliff, we looked at the passing of the deadline that same day for Congress to agree a budget. We also looked at the looming deadline for Congress to agree a new higher ceiling for Federal Government debt, currently standing at $16.699 trillion. Without an agreement to raise the limit, the government will start becoming unable to pay some of its bills from around 17 October.
One week on and no agreement has been reached on either a budget or a higher debt ceiling.
Failure to agree on a budget has led to the ‘shut-down’ of government. Only essential services are being maintained; the rest are no longer functioning and workers have been sent home on ‘unpaid leave’. This has led to considerable hardship for many in the USA. It has had little effect, however, on the rest of the world, except for tourists to the USA being unable to visit various national parks and monuments.
Failure to raise the debt ceiling, however, could have profound consequences for the rest of the world. It could have large and adverse effects of global growth, global trade, global investment and global financial markets. The articles below explore some of these consequences.
U.S. Congress enters crucial week in budget, debt limit battles Reuters, Richard Cowan (7/10/13)
Debt ceiling: Understanding what’s at stake CBS Moneywatch, Alain Sherter (7/10/13)
Q&A: What is the US debt ceiling? BBC News, Ben Morris (3/10/13)
Five Reasons to Fear the Debt Ceiling Bloomberg (6/10/13)
A U.S. Default Seen as Catastrophe Dwarfing Lehma Bloomberg Businessweek, Yalman Onaran (6/10/13)
China tells US to avoid debt crisis for sake of global economy BBC News (7/10/13)
US shutdown is starting to hit business, says Commerce Secretary BBC News (6/10/13)
Why Australia should fear a US government default The Guardian, Greg Jericho (7/10/13)
Could the US default over just $6bn? BBC News, Linda Yueh (11/10/13)
IMF piles pressure on US to reconcile differences and prevent debt default The Guardian, Larry Elliott and Jill Treanor (10/10/13)
Republicans offer to raise US debt ceiling for six weeks The Telegraph, Peter Foster and Raf Sanchez (11/10/13)
Questions
- If a debt ceiling is reached, what does this imply for the budget deficit?
- How serious are the two current fiscal cliffs?
- How would a continuation of the partial government shut-down impact on the US private sector?
- What multiplier effects on the rest of the world are likely to arise from a cut in US government expenditure or a rise in taxes? What determines the size of these multiplier effects?
- Explain the likely effect of the current crisis on the exchange rate of the dollar into other currencies.
- Why might the looming problem of reaching the debt ceiling drive up long-term interest rates in the USA and beyond?
For the second time in nine months, the USA has approached a fiscal cliff. This is where the federal government is forced to make government expenditure cuts and/or impose tax rises. There are two types of cliff face. The first is a legal limit on the size of the federal government debt and hence deficit. The second is failure to agree on a budget.
On January 1st this year, a fiscal cliff was narrowly averted by a last-minute agreement to raise the size of the permitted debt. On the 1st October (the beginning of the financial year), however, the US economy ‘fell over the cliff’. This time is was a failure by Congress to reach agreement over the federal budget. The sticking point was an unwillingness of the Republican majority in the House of Representatives to agree to a budget without the government making concessions on its healthcare reform. The government was unwilling to do that and so no budget was passed.
With no budget, much of government has to shut down! In practice, this means that all non-essential workers will cease to be paid. 
That includes workers in housing, parts of healthcare, the civil law part of the justice system, immigration, regulatory agencies, the passport service, parks and museums. Even workers in essential areas, such as civilian workers in the military, police and social services, are likely to see their pay delayed until the problem is resolved. The articles below look at some of the implications of this partial shut-down.
It is hoped that, within a few days, agreement on a budget will be reached. But that will not be the end of the story because a second fiscal cliff looms. And that is of the first type. There is currently a legal limit to Federal Government debt of $16.699 trillion. Because that limit was reached earlier this year, from May 18 the government has been able to use various ‘extraordinary measures‘ to carry on borrowing. These measures will run out, however, around 17 October. From then, if a new higher debt ceiling has not been agreed by Congress, the government will be unable to pay some of its bills. For example, on 1 November it will get a bill of $67billion for social security, medicare and veterans benefits. As the second Independent article below explains:
In a government shutdown, the federal government is not allowed to make any new spending commitments. By contrast, if we hit the debt-ceiling then the Treasury Department won’t be able to borrow money to pay for spending that Congress has already approved. In that case, either Congress will have to lift the debt ceiling or the federal government will have to default on some of its bills, possibly including payments to bondholders or Social Security payouts. That could trigger big disruptions in the financial markets — or a long-term rise in borrowing costs.
Not surprisingly, financial markets are nervous. Although the direct effect of lost output will be relatively small, provided agreements on the budget and the debt are reached fairly soon, the impact on confidence in the US system of government could be more damaging. Not only could this curb recovery in the USA, it could have a significant effect on global recovery, given the size and importance of the US economy to the rest of the world.
Webcasts
What does the shutdown mean for normal Americans? BBC News, Keith Doyle (1/10/13)
How the government shut down is being reported in the US BBC News (1/10/13)
Shutdown could slam frail U.S. economy Reuters, Bobbi Rebell (1/10/13)
Shutdown Will Cost U.S. Economy $300 Million a Day, IHS Says Bloomberg, Jeanna Smialek & Ian Katz (1/10/13)
How will the US government shutdown affect the global economy? The Guardian, Larry Elliott and Guy Grandjean (1/10/13)
How would a government shutdown affect the rebounding economy? Aljazeera, Duarte Geraldino (30/9/13)
How will the US government shutdown affect the economy? BBC News, Richard Lister (1/10/13)
Shutdown continues as Obama and Republicans fail to agree BBC News, Rajini Vaidynathan (2/10/13)
Former US Secretary of Labor Robert Reich on shutdown BBC News, Robert Reich (2/10/13)
Government shutdown: What’s the cost? CBS News, Rebecca Kaplan (1/10/13)
US shutdown will have ‘minimal impact’ on global economy One News (New Zealand), Dan Zirker (2/10/13)
What is the US debt ceiling? BBC News, Hugh Pym (14/10/13)
Articles
US wakes up to government shutdown as Congress fails to strike budget deal Independent, Nikhil Kumar (1/10/13)
US begins government shutdown as budget deadline passes BBC News (1/10/13)
David Cameron warns on world growth as US government shuts down The Telegraph, Damien McElroy (1/10/13)
Shutdown showdown: A glossary Aljazeera, Ben Piven (30/9/13)
Everything you need to know about how the partial shutdown will work in US Independent, Brad Plumer (1/10/13)
What’s the economic impact of a US government shutdown? BBC News, Kim Gittleson (1/10/13) (follow links at top of screen for further articles)
US government shutdown isn’t the worst of it BBC News, Linda Yueh (30/9/13)
Onset of the storm BBC News, Robert Peston (1/10/13)
The gathering storm? BBC News, Robert Peston (30/9/13)
Government shutdown: what’s really going on – and who’s to blame? The Guardian, Dan Roberts (30/9/13)
Government shutdown threat is getting very old, very fast CNN, Julian Zelizer (30/9/13)
US fiscal cliff fears rattle the markets The Australian, Adam Creighton (1/10/13)
U.S. Government Shutdown Sinks Dollar Forbes, Dean Popplewell (1/10/13)
US Government Shutdown: European Markets Not Fretting Over Temporary Closure International Business Times, Ishaq Siddiqi (1/10/13)
The States to plunge into abyss of debt, off fiscal cliff Pravda, Irina Sabinina (1/10/13)
Shutting down the United States government nothing new The Vancouver Sun, Andrew Coyne (1/10/13)
Christine Lagarde urges US that debt crisis threatens world economy The Guardian, Larry Elliott (3/10/13)
U.S. failure to lift debt ceiling could damage world – IMF Reuters (3/10/13)
Data
US government shutdown: in numbers The Guardian (see also)
US Budget: Historical Tables White House Office of Management and Budget (includes estimates to 2018 as well as historical data)
Questions
- If a debt ceiling is reached, what does this imply for the budget deficit?
- How serious are the two current fiscal cliffs?
- How would a continuation of the partial government shut-down impact on the US private sector?
- What multiplier effects on the rest of the world are likely to arise from a cut in US government expenditure or a rise in taxes? What determines the size of these multiplier effects?
- Explain the likely effect of the current crisis on the exchange rate of the dollar into other currencies.
- Why might the looming problem of reaching the debt ceiling drive up long-term interest rates in the USA and beyond?
As we saw in the news item The difficult exit from cheap money, central banks around the world have been operating an extremely loose monetary policy since the beginning of 2009. Their interest rates have been close to zero and trillions of dollars of extra money has been injected into the world economy through various programmes of quantitative easing.
For the past few months the Federal Reserve has been purchasing bonds under its most recent programme dubbed QE3, and thereby increasing narrow money, by $85 billion per month. Since the start of its QE programme in 2009, it has pumped around $2.8 trillion of extra money into the US and world economies. This huge increase in money supply has boosted the demand for assets worldwide and world stock markets have risen. Much of the money has flowed into developing countries, such as India, and has acted as a boost to their economies.
Once the US economy is growing strongly again, the aim is to taper off, and ultimately end or even reverse, the QE programme. It was expected that the Fed would decide to start this tapering off process at its meeting on 18 September – perhaps reducing bond purchases initially by some $10 billion. (Note that this would still be an increase in money supply, just a slightly smaller one.) Over the past few days, US bond prices have been falling (and yields increasing) in anticipation of such a move.
As it turned out, the Fed decided to delay tapering off. It will continue with its assets purchase programme of $85 billion per month for the time being. The reason given was that the US economy was still too fragile and needed the monthly injections of money to stay at the current level.
Normally it might be expected that the announcement of a more fragile recovery would cause the US stock market, and others worldwide, to fall. In fact the opposite occurred, with investors relieved that the extra money, which allows extra asset purchases, would continue at the same rate.
But this then raises the question of just what will be the effect when tapering off does actually occur. Will stock markets then go into a tailspin? Or will they merely stop rising so fast. That depends very much on the role of speculation.
Webcasts
Bernanke’s Own Words on Asset Purchases, Economy Bloomberg (18/9/13)
Bernanke: Fed to delay bond tapering PBS Newshour on YouTube (full speech plus questions) (18/9/13)
No tapering announced by Fed CNBC on Yahoo Finance (18/9/113)
The impact of US stimulus moves at home and abroad BBC News, Stephanie Flanders (18/9/13)
Is the upturn reaching Americans? BBC World, Stephanie Flanders (17/9/13)
Shares hit high as Federal Reserve maintains stimulus BBC News, Stephanie Flanders (18/9/13)
US Fed decision to delay tapering was a relief ET Now (India), Bimal Jalan (19/9/13)
Articles
Federal Reserve surprises markets by delaying QE tapering The Telegraph, Katherine Rushton (18/9/13)
Federal Reserve delays QE tapering: the full statement The Telegraph (18/9/13)
Q&A: What is tapering? BBC News (18/9/13)
Fed delay is no reason to celebrate The Guardian, Larry Elliott (19/9/13)
Federal Reserve tapering decision has baffled the markets The Guardian, Larry Elliott (19/9/13)
Taper tiger The Economist (21/9/13)
Everything You Need to Know About the Fed’s Decision Not to Taper QE3 The Atlantic, Matthew O’Brien (18/9/13)
Fed’s dovish turn leaves Wall Street economists mulling taper timing: poll Reuters, Chris Reese (18/9/13)
Good news and bad news from the Fed BBC News, Stephanie Flanders (19/9/13)
Is the Fed frightened of its shadow? BBC News, Robert Peston (19/9/13)
The Federal Reserve and Janet Yellen face a tough task with insufficient tools The Guardian, Mohamed A. El-Erian (14/10/13)
Questions
- Why might a slowing down in the increase in US money supply cause asset prices to fall, rather than merely to rise less quickly?
- Why has the US QE programme led to a rise in asset prices overseas?
- Distinguish between stabilising and destabilising speculation. Which type of speculation has been occurring as a result of the US QE programme?
- How has QE affected unemployment in the UK and USA? How is the participation rate and the flexibility of labour markets relevant to the answer?
- Explain the following two statements by Stephanie Flanders and Robert Peston respectively. “The market conditions argument has a circularity to it: talk of tapering leads to higher market rates, which in turn puts the taper itself on hold.” “The Fed simply hinting that less money would be created, means that there will be no reduction in the amount of money created (for now at least).”
- Why have US long-term interest rates, including mortgage rates, risen since May of this year?
- What impact have higher US long-term interest rates had on economies in the developing world? Explain.
Tight fiscal policies are being pursued in many countries to deal with high public-sector deficits that resulted from the deep recession of 2008/9. This has put the main onus on monetary policy as the means of stimulating recovery. As a result we have seen record low interest rates around the world, set at only slightly above zero in the main industrialised countries for the past 4½ years. In addition, there have been large increases in narrow money as a result of massive programmes of quantitative easing.
Yet recovery remains fragile in many countries, including the UK and much of the rest of Europe. And a new problem has been worries by potential investors that loose monetary policy may be soon coming to an end. As the June blog The difficult exit from cheap money pointed out:
The US economy has been showing stronger growth in recent months and, as a result, the Fed has indicated that it may soon have to begin tightening monetary policy. It is not doing so yet, nor are other central banks, but the concern that this may happen in the medium term has been enough to persuade many investors that stock markets are likely to fall as money eventually becomes tighter. Given the high degree of speculation on stock markets, this has led to a large-scale selling of shares as investors try to ‘get ahead of the curve’.
Central banks have responded with a new approach to monetary policy. This is known as ‘forward guidance’. The idea is to manage expectations by saying what the central bank will do over the coming months.
The USA was the first to pursue this approach. In September 2012 the Fed committed to bond purchase of $40bn per month (increased to $85bn per month in January 2013) for the foreseeable future; and record low interest rates of between 0% and 0.25% would continue. Indeed, as pointed out above, it was the ‘guidance’ last month that such a policy would be tapered off at some point, that sent stock markets falling in June.
The Fed has since revised its guidance. On 10 July, Ben Bernanke, the Fed Chairman said that monetary policy would not be tightened for the foreseeable future. With fiscal policy having been tightened, QE would continue and interest rates would not be raised until unemployment had fallen to 6.5%.
Japan has been issuing forward guidance since last December. Its declared aim has been to lower the exchange rate and raise inflation. It would take whatever fiscal and monetary policies were deemed necessary to achieve this (see A J-curve for Japan? and Japan’s three arrows).
Then on 4 July both the Bank of England and the ECB adopted forward guidance too. Worried that growth in the US economy would lead to an end to loose monetary policy before too long and that this would drive up interest rates worldwide, both central banks committed to keeping interest rates low for an extended period of time. Indeed, the ECB declared that the next movement in interest rates would more likely be down than up. Mario Draghi, the ECB president said that the ending of loose monetary policy is ‘very distant’.
The effect of this forward guidance has been to boost stock markets again. The hope is that by managing expectations in this way, the real economy will be affected too, with increased confidence leading to higher investment and faster economic growth.
Update (8/8/13)
With the publication of its August 2013 Inflation Report, the Bank of England clarified its approach to forward guidance. It was announced that Bank Rate would stay at the current historically low level of 0.5% ‘at least until the Labour Force Survey headline measure of unemployment has fallen to a threshold of 7%’. In his Inflation Report Press Conference opening remarks, Mark Carney, Governor of the Bank of England, also stated that:
While the unemployment rate remains above 7%, the MPC stands ready to undertake further asset purchases if further stimulus is warranted. But until the unemployment threshold is reached the MPC intends not to reduce the stock of asset purchases from the current £375 billion.
Nevertheless, the Bank reserved the right to abondon this undertaking under cirtain circumstances. As Mark Carney put it:
The Bank of England’s unwavering commitment to price stability and financial stability is such that this threshold guidance will cease to apply if material risks to either are judged to have arisen. In that event, the unemployment threshold would be ‘knocked out’. The guidance will remain in place only if, in the MPC’s view, CPI inflation 18 to 24 months ahead is more likely than not to be below 2.5%, medium-term inflation expectations remain sufficiently well anchored, and the FPC has not judged that the stance of monetary policy poses a significant threat to financial stability that cannot otherwise be contained through the considerable supervisory and regulatory policy tools of the various authorities. The two inflation knockouts ensure that the guidance remains fully consistent with our primary objective of price stability. The financial stability knockout takes full advantage of the new institutional structure at the Bank of England, ensuring that monetary and macroprudential policies coordinate to support a sustainable recovery. The knock-outs would not necessarily trigger an increase in Bank Rate – they would instead be a prompt for the MPC to reconsider the appropriate stance of policy.
Similarly, it is important to be clear that Bank Rate will not automatically be increased when the unemployment threshold is reached. Nor is 7% a target for unemployment. The rate of unemployment consistent with medium-term price stability – a rate that monetary policy can do little to affect – is likely to be lower than this. So 7% is merely a ‘way station’ at which the MPC will reassess the state of the economy, the progress of the economic recovery, and, in that context, the appropriate stance of monetary policy.
The articles in the updated section below consider the implications of this forward guidance and the caveat that the undertaking might be abondoned in certain circumstances.
Articles
Q&A: What is ‘forward guidance’ BBC News, Laurence Knight (4/7/13)
Forward guidance crosses the Atlantic The Economist, P.W. (4/7/13)
ECB has no plans to exit loose policies, says Benoit Coeure The Telegraph, Szu Ping Chan (25/6/13)
ECB issues unprecedented forward guidance The Telegraph, Denise Roland (4/7/13)
Independence day for central banks BBC News, Stephanie Flanders (4/7/13)
The Monetary Policy Committee’s search for guidance BBC News, Stephanie Flanders (16/7/13)
The Monetary Policy Committee’s search for guidance (II) BBC News, Stephanie Flanders (17/7/13)
Bank of England surprise statement sends markets up and sterling tumbling The Guardian, Jill Treanor and Angela Monaghan (4/7/13)
Forward guidance only works if you do it right Financial Times, Wolfgang Münchau (7/7/13)
Fed’s Forward Guidance Failing to Deliver Wall Street Journal, Nick Hastings (15/7/13)
Talking Point: Thoughts on ECB forward guidance Financial Times, Dave Shellock (11/7/13)
Forward guidance in the UK is likely to fail as the Fed taper approaches City A.M., Peter Warburton (12/7/13)
Forward guidance more than passing fashion for central banks Reuters, Sakari Suoninen (11/7/13)
Markets await Mark Carney’s ‘forward guidance’ The Guardian, Heather Stewart (17/7/13)
Beware Guidance The Economist, George Buckley (25/7/13)
Articles for update
The watered down version of Forward Guidance Reuters, Kathleen Brooks (8/8/13)
Clarity Versus Flexibility at the Bank of England Bloomberg (7/8/13)
Mark Carney’s guidance leaves financial markets feeling lost Independent, Ben Chu (8/8/13)
Bank links interest rates to unemployment target BBC News (7/8/13)
Mark Carney says forward guidance should boost economy BBC News (8/8/13)
The Bank’s new guidance BBC News, Stephanie Flanders (7/8/13)
Uncertainty over BoE guidance lifts sterling to 7-week peak Reuters, Spriha Srivastava (8/8/13)
Bank of England’s guidance is clear, say most economists: Poll The Economic Times (8/8/13)
Britain’s economy: How is it really doing? The Economist (10/8/13)
Markets give thumbs down to Mark Carney’s latest push on forward guidance The Guardian, Larry Elliott (28/8/13)
Carney’s guidance on guidance BBC News, Stephanie Flanders (28/8/13)
Webcasts and podcasts for update
Inflation Report Press Conference Bank of England (7/8/13)
Interest rates to be held until unemployment drops to 7% BBC News, Extracts of Statement by Mark Carney, Governor of the Band of England (7/8/13)
Bank of England links rates to unemployment target BBC News (7/8/13)
Mark Carney: Financial institutions ‘have to change culture’ BBC Today Programme (8/8/13)
Bank of England’s Mark Carney announces rates held BBC News. John Moylan (7/8/13)
Central Bank Statements and Speeches
How does forward guidance about the Federal Reserve’s target for the federal funds rate support the economic recovery? Federal Reserve (19/6/13)
Remit for the Monetary Policy Committee HM Treasury (20/3/13)
Bank of England maintains Bank Rate at 0.5% and the size of the Asset Purchase Programme at £375 billion Bank of England (4/7/13)
Monthly Bulletin ECB (see Box 1) (July 2013)
Inflation Report Press Conference: Opening remarks by the Governor Bank of England (7/8/13)
MPC document on Monetary policy trade-offs and forward guidance Bank of England (7/8/13)
Monetary policy and forward guidance in the UK Bank of England, David Miles (24/9/13)
Monetary strategy and prospects Bank of England, Paul Tucker (24/9/13)
Questions
- Is forward guidance a ‘rules-based’ or ‘discretion-based’ approach to monetary policy?
- Is it possible to provide forward guidance while at the same time pursuing an inflation target?
- If people know that central banks are trying to manage expectations, will this help or hinder central banks?
- Does the adoption of forward guidance by the Bank of England and ECB make them more or less dependent on the Fed’s policy?
- Why may forward guidance be a more effective means of controlling interest rates on long-term bonds (and other long-term rates too) than the traditional policy of setting the repo rate on a month-by-month basis?
- What will determine the likely success of forward guidance in determining long-term bond rates?
- Is forward guidance likely to make stock market speculation less destabilising?
- Is what ways is the ‘threshold guidance’ by the Bank of England likely to make the current expansionary stance of monetary policy more effective?
- Is 7% the ‘natural rate of unemployment’? Explain your reasoning.
Japan has suffered from deflation on and off for more than 20 years. A problem with falling prices is that they discourage spending as people wait for prices to fall further. One of the three elements of the Japanese government’s macroeconomic policy (see Japan’s three arrows) has been expansionary monetary policy, including aggressive quantitative easing. A key aim of this is to achieve an inflation target of 2% and, hopefully, propel the economy out of its deflationary trap.
The latest news, therefore, from Japan would seem to be good: consumer prices rose 0.4% in June – the first rise for more than a year. But while some analysts see the rise in prices to be partly the result of a recovery in demand (i.e. demand-pull inflation), others claim that the inflation is largely of the cost-push variety as the weaker yen has increased the price of imported fuel and food.
If Japanese recovery is to be sustained and broadly based, a growth in real wages should be a core component. As it is, real wages are not growing. This could seriously constrain the recovery. For real wages to grow, employers need to be convinced that economic recovery will be sustained and that it would be profitable to take on more labour.
The success of the expansionary policy, therefore, depends in large part on its effect on expectations. Do people believe that prices will continue to rise? Do employers believe that the economy will continue to expand? And do people believe that their real wages will rise?
Articles
Japan prices turn higher, but BOJ’s goal remains tall order Reuters, Tetsushi Kajimoto and Leika Kihara (26/7/13)
How Japan Could Go from Deflation to Hyperinflation in a Heartbeat The Wall Street Journal, Michael J. Casey (24/7/13)
Japan Prices Rise Most Since ’08 in Boost for Abe Bloomberg, Toru Fujioka & Andy Sharp (26/7/13)
Japan central bank finds the pessimists come from within Reuters, Leika Kihara (26/7/13)
Japan’s Fiscal Crossroads: Will Abenomics Mean Tougher Changes? The Daily Beast, Daniel Gross (26/7/13)
Japan Economist Makes Rare Call to Tackle Debt The Wall Street Journal, Kosaku Narioka (25/7/13)
Japanese Consumer Prices Rise In Sign Of Some Success In Abe Economic Policy International Business Times, Nat Rudarakanchana (26/7/13)
Data
Bank of Japan Statistics Bank of Japan
Statistics Statistics Bureau of Japan
International sites for data Economics Network
Questions
- Distinguish between cost-push and demand-pull inflation? Do higher prices resulting from a depreciation of the currency always imply that the resulting inflation is of the cost-push variety?
- In the Japanese context, is inflation wholly desirable or are there any undesirable consequences?
- Consider whether a two-year time frame is realistic for the the Bank of Japan to achieve its 2% inflation target.
- What is meant by the output gap? Using sources such as the European Commission’s European Economy, AMECO database and the OECD’s Economic Outlook: Statistical Annex Tables (see sites 6 and 7 in the Economics Network’s links to Economic Data freely available online) trace the Japanese output gap over the past 10 years and comment on your findings.
- What supply-side constraints are likely to limit the rate and extent of recovery in Japan? What is the Japanese government doing about this (see the third arrow of Japan’s three arrows)?
In a News Item of 1 October, Over the Cliff, we looked at the passing of the deadline that same day for Congress to agree a budget. We also looked at the looming deadline for Congress to agree a new higher ceiling for Federal Government debt, currently standing at $16.699 trillion. Without an agreement to raise the limit, the government will start becoming unable to pay some of its bills from around 17 October.
Failure to agree on a budget has led to the ‘shut-down’ of government. Only essential services are being maintained; the rest are no longer functioning and workers have been sent home on ‘unpaid leave’. This has led to considerable hardship for many in the USA. It has had little effect, however, on the rest of the world, except for tourists to the USA being unable to visit various national parks and monuments.
