Coverage: Government shutdown cost economy $6 billion
The month-long government shutdown cost the U.S. economy $6 billion, according to Friday estimates by S&P Global Ratings. That’s $300 million more than Trump’s demand for $5.7 billion to build the southern border wall.
Morgan GStalter of The Hill had the news:
Trump’s top economic adviser, Larry Kudlow, said earlier this week that he didn’t expect the shutdown to do lasting damage to the U.S. economy.
“When the government reopens — and I’m not here to negotiate; I’m not going to make a prediction, that’s up to the president — you will see an immediate snapback,” Kudlow told reporters.
Kudlow faced backlash during the shutdown when he said that thousands of federal employees were “volunteering” to work due to their “allegiance to President Trump.”
“They honor us and they do it because of their love for their country and the office of the presidency and presumably their allegiance to President Trump,” Kudlow said. “They’re doing it. Give them some credit. There are a lot of wonderful people in this country.”
Alexandra Hutzler of Newsweek reported that other shutdowns were less expensive:
Trump’s shutdown was the longest and most expensive in U.S. history. In 2013, former President Barack Obama shut down the government for 16 days over the Affordable Care Act and the debt ceiling, a move that cost the country about $2.6 billion. And former President Bill Clinton’s 21-day shutdown, which until now had been the longest in history, had cost $2.3 billion.
The government will remain funded for the next three weeks, until February 15. Trump made it clear on Friday that he expects Congress to reach a deal over border wall funding in their next federal spending bill. If not, he warned that the government could close again or he will use his executive power to declare a national emergency at the southern border.
“So, let me be very clear: We really have no choice but to build a powerful wall or steel barrier,” Trump said. “If we don’t get a fair deal from Congress, the government either shutdown on Feb. 15 again, or I will use the powers afforded to me under the laws and the Constitution of the United States to address this emergency.”
Michael B. Kelly of Yahoo Finance reported that the effect on the economy will be half a percentage point:
In a note late Friday night, Morgan Stanley analysts estimated that the shutdown would result in a .5 percentage point drag on first quarter GDP growth.
“The direct and indirect effect of the government shutdown have led us to review our 1Q growth estimate, and we now see 1Q GDP growth at 1.7%,” the analysts wrote. “That downgrade to our 1Q GDP forecast includes a 0.5pp drag from the shutdown.”
The analysts explained that “direct impacts of the government shutdown will flow through GDP via reduced hours worked by government employees, while indirect effects will be felt through impacts on government contracts, and the reduced consumption of government employees who have been without pay.”