CBO: Shutdown Has Already Cost Economy $18 Billion
Up to $14 Billion in GDP Losses May Never Be Recovered
Key Takeaways:
- The ongoing federal government shutdown has cost the U.S. economy at least $18 billion this year, according to an Oct. 29 report from the Congressional Budget Office.
- The CBO said much of the damage will be temporary but estimated $7 billion to $14 billion in lost GDP will not be recovered depending on how long the shutdown lasts.
- If the shutdown extends to mid-November, the CBO projects GDP growth will fall 1.5 percentage points and the unemployment rate could rise 0.4 percentage points in October.
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The federal government shutdown has already cost the U.S. economy at least $18 billion this year, a figure that “will intensify” in the weeks to come, according to the Congressional Budget Office.
The nonpartisan organization emphasized much of the impact will be temporary, with a short-term boost to economic growth in the first quarter of next year. However, they estimate between $7 billion and $14 billion of the hit to gross domestic product will not be recovered, dependent on the ultimate length of the shutdown.
GDP is already poised to be at least one percentage point lower in the fourth quarter due to the government shutdown, according to the CBOreleased Oct. 29.
Once the shutdown reaches the six-week mark — or mid-November — the group expects real GDP growth to be 1.5 percentage points lower in the fourth quarter, a reduction of $28 billion. And if it extends to eight weeks, roughly around the Thanksgiving holiday, the hit to real GDP will grow to two percentage points, or $39 billion.
RELATED:What DOT’s Shutdown Plan Means for Trucking
Multiple factors are driving the pullback in economic activity, including fewer services provided by federal workers, lower output in theprivate sectorand less federal spending on goods, services andfood assistance, according to the CBO report.
CBO estimates that 650,000 federal employees are furloughed due to the shutdown. If all furloughed workers were to be counted as unemployed on temporary layoff, the group estimates the unemployment rate would climb 0.4 percentage points in October as a result. That would mark the biggest one-month jump in the jobless rate since the onset of the pandemic.
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