The last shutdown of the federal government, in 1995-96, happened in a very different economic environment than today. In November 1995, when the standoff between President Bill Clinton and the Republican-controlled Congress resulted in major portions of the government suspending operations, unemployment stood at 5.6 percent. Gross domestic product grew at a rate of more than 4 percent. Productivity was strong, and for the first time since the 1970s compensation for all income quintiles was poised to make real gains in the coming years. On Wall Street, the longest bull market in modern history was in high gear. The United States was in the middle of the longest, strongest economic boom of the post-World War II era.
The nation was different then. It was at peace. We hadn’t borrowed heavily to finance two wars. The. modest Clinton tax increase had prepared the way to leave a federal surplus in 2000. Federal debt as a percentage of GDP was around 64 percent, as opposed to 102 percent in January of this year. That shutdown was felt in National Park closings, not the specter of default. We were recovering smartly from the 1991 recession, which had been brought on by the savings-and-loan scandal and the oil-price spike from Iraq’s invasion of Kuwait. The Conference Board’s Consumer Confidence Index was nearly 102 vs. 79.7 this month. The notion that Americans would come to believe that their children would not enjoy as good a standard of living as they did would have seemed laughable.
The structure and dynamics of the economy were very different, too.More