CBO: at least $11 billion lost by the U.S. economy because of the shutdown

Non-partisan budget office of the Congress estimated the total losses of the US economy from the shutdown, which lasted 35 days: «partial closure was detained by Federal spending of $18 billion, and has suspended certain Federal services, which has reduced the projected level of real GDP in the first quarter of 2019 by $8 billion (or 0.2 percent)».

NEC Dir. Larry Kudlow on new CBO report that the shutdown cost the U.S. economy billions: «No, I won’t acknowledge any of that right now…Let’s see how it rolls out.»

«There’s certainly no permanent damage to the economy.» https://t.co/ByvKoiuelC pic.twitter.com/FOzP8hMuu9

— ABC News (@ABC) January 28, 2019

As stated in a report published today by the budget office of the Congress (CBO), as a result of the economic slowdown, real GDP in the fourth quarter of 2018 were reduced by $3 billion In the first quarter of 2019, the level of real GDP is estimated at $8 billion lower than it was supposed to be according to previous forecasts. This is not over, and in the subsequent quarters, according to the authors of the report, the impact of the shutdown will continue to provide downside pressure on the economy.

Only about $3 billion, or 0.02% of projected annual GDP in 2019 will be lost forever. «Stop reduced economic activity mainly due to the loss of the contribution of Federal employees to GDP, delays in Federal spending on goods and services, and reductions in aggregate demand», — the report says.

CBO: at least $11 billion lost by the U.S. economy because of the shutdownThe US lost at least $18 billion because of the shutdown

And this is only direct losses that are directly associated with the termination of financing of the government. There is another prejudice, which is difficult to calculate, but it can also be serious.

«Assessments used in the report do not include other, indirect negative effects stop, which are more difficult to quantify. For example, some businesses could not obtain Federal permits and certificates, and others are faced with limited access to credit provided by the Federal government.»

Such factors probably started to lead to the fact that firms have delayed decisions on investments and hiring. In addition, risks to the economy have become increasingly significant, since the stop lasted for an unusually long time. Although their exact impact on the volume of production is not clear, the negative impact of such factors could be even more important, if partial disconnection has exceeded five weeks.

Source