One chart that shows how the federal shutdown hit the US economy

Despite having avoided a US government default, the economic damage of the temporary October shutdown can't be so easily undone.

We're beginning to see data releases for those weeks now, and they're beginning to reveal a grim economic picture. Betsey Stevenson of President Barack Obama's Council of Economic Advisers has pointed to this chart:

You can see that employers reporting that they were hiring fell just as initial unemployment insurance claims surged. This squeeze and poor labour market data are exactly why investors are now expecting tapering to come later.

Before today's jobs release not many thought that the Federal Reserve would begin tapering as soon as December. Now Barclays have left that December taper camp (they're now forecasting that asset purchases will be scaled back from March 2014).

The idea is that loose Fed policy will continue to offset the negative aggregate demand shock that was the federal government shutdown.