Government shutdown costs US economy $11B with permanent $3B loss
The costs of the US federal shutdown are rolling in as the nonpartisan Congressional Budget Office (CBO) crunches the numbers. The economic losses reflect the lost output of federal employees, delayed government spending and reduced demand, according to CNBC.
A report released Monday detailed the estimated $3 billion loss to economic activity during the final quarter of 2018 in the United States. Numbers from 2019’s first quarter are expected to be greater, at $8 billion.
As federal workers return to their jobs, most economic damage “will be reversed”, however, the $3 billion loss will be permanent following the historic 35-day government closure.
“Among those who experienced the largest and most direct negative effects are federal workers who faced delayed compensation and private-sector entities that lost business,” said the CBO report. “Some of those private-sector entities will never recoup that lost income.”
Indirect effects have not been tabulated as of yet, those such as reduced access to government loans and a suspension of certain federal permits.
Businesses were starting to put off investments and hiring decisions in the midst of the shutdown, warning that staffing risks were accumulating.
“I am hopeful that we have finally reached a turning point with these mindless shutdowns, but this CBO estimate serves as a stark warning to President Trump on the consequences of using American workers as a bargaining chip,” said Democratic Rep. John Yarmouth (Kentucky).
The CBO report projected slower economic growth this year across the board, dropping to an estimated 2.3% from last year’s 3.1%.