NEW YORK – The five-week partial shutdown of the United States government will ultimately cost the world’s biggest economy just $3 billion, though the closure had indirect effects that are tough to measure, the Congressional Budget Office said.
The impasse delayed about $18 billion in federal discretionary spending, the non-partisan arm of Congress said Monday in a report on the shutdown. As a result, the annualized rate of fourth-quarter gross domestic product growth is expected to be 0.2 percentage point lower than anticipated, while expansion in the first three months of the year will be 0.4 percentage point weaker, it said.
However, the CBO said most of the lost output “will eventually be recovered,” with second-quarter growth expected to bounce back. The net drop in GDP for the calendar year will amount to $3 billion, or 0.02 percent of annual output, the agency said.
The agency cautioned, however, that its estimates “do not incorporate other, more indirect negative effects of the shutdown, which are more difficult to quantify but were probably becoming more significant as it continued.” That includes businesses that couldn’t get permits or loans, factors that “were probably beginning to lead firms to postpone investment and hiring decisions,” the CBO said.
President Donald Trump on Friday agreed to legislation reopening the government, ending the partial shutdown that began Dec. 22, when he and congressional Democrats clashed over the president’s demand to build a wall along the Mexican border.
The closure may have deprived the economy of more than 300 million work hours that would have come from furloughed workers and contractors during the longest shutdown on record.
That calculation is based on adding the estimated more than 380,000 furloughed employees and 1.2 million contractors who would have been working, and multiplying by the most recent figure for average weekly hours for federal workers from the Labor Department.
The tally of contractors is from Paul Light, a New York University professor of public service who estimated the total workers who were caught in the shutdown, from cooks to custodians.
During the 16-day shutdown in 2013, about 850,000 federal workers stayed home without pay while the latest shutdown had idled about 380,000, according to an estimate by Senate Democrats in early January. Others worked without pay.
The Bloomberg calculations are based on five weeks of missed work and don’t account for holidays. The average weekly hours estimate doesn’t necessarily represent all workers impacted by the shutdown.
Chibuike Oguh and Andrew Mayeda are reporters for Bloomberg News.
