Will a government shutdown hurt the US economy?

The United States government is set to shut down unless Congress passes an appropriations bill to fund its operations.

Without this legislation, federal agencies will be forced to suspend nonessential activities starting on Wednesday at 12: 01am in Washington, DC (04: 01 GMT).

Although Republicans control the House of Representatives, Senate and White House, they cannot pass the bill on their own. While Republicans have 53 of the 100 seats in the Senate, 60 votes are needed to advance the bill to a vote.

Republicans have proposed a short-term spending plan, but Democrats have been trying to use the approaching shutdown as leverage. They are pushing to reverse Medicaid cuts included in tax legislation passed in July and extend tax credits for healthcare purchased through government exchanges.

With neither side willing to compromise, a shutdown could have ripple effects across the US economy.

Layoffs and impact on consumer sentiment

The federal government is the nation’s largest employer. In a memo last week, federal agencies were told to prepare layoff notices for programmes that would run out of funds by the deadline and for those not considered a priority by the administration. The memo itself did not explicitly make it clear what those priorities are.

The White House did not respond to Al Jazeera’s request for clarification.

The cuts would be through what is called Reduction In Force, or RIF. But it is unclear whether the cuts, even if the president were to push them through, would last because Trump doesn’t have the power to carry them out, said Daniel Hornung, policy fellow at the Stanford Institute of Economic Policy Research.

“There’s no legal authority that you [the White House] get from shutting down to do RIFs,” Hornung  told Al Jazeera.

RIFs require 30- to 60-days notice if an agency looks to make cuts, so Hornung expected that any cuts made now would be challenged in court.

But even if the job cuts are blocked, it is not clear when that would happen. As a result, those out of work may put off purchases, especially for big-ticket items, according to Michael Klein, professor of international economic affairs at The Fletcher School at Tufts University in Massachusetts.

“Consumers will start spending less because they’re concerned about what the future looks like,” Klein told Al Jazeera.

“It might be decided [by the court] that it’s not lawful, but that could be a long time. Even if it all gets resolved, those out of a job probably aren’t going to be spending like they otherwise would.”

The memo did not provide a specific number of jobs that could be cut. It comes as more than 150,000 workers are also expected to leave the federal workforce after accepting buyouts this year. Those reductions – as part of the deferred exit programme