CBO says US government shutdown could cost economy billions
(MENAFN) The ongoing US federal government shutdown could cost the economy between $7 billion and $14 billion, potentially reducing fourth-quarter GDP by as much as 2%, according to estimates from the Congressional Budget Office (CBO). The shutdown, now in its 29th day, shows no immediate resolution. Senate Democrats have pushed for talks to extend expiring tax credits to help Americans with private health insurance under the Affordable Care Act, while Senate Republicans have advocated a temporary funding plan to keep government agencies running through Nov. 21.
The CBO highlighted that delays in federal spending on goods and services, employee salaries, and food assistance programs for low-income Americans would have a negative economic impact. "The effects of the shutdown on the economy are uncertain. Those effects depend on decisions made by the Administration throughout the shutdown. In addition, how federal employees and contractors respond to the delay in compensation is uncertain," the office said.
According to the report, if the shutdown ends this week, the economy would face a permanent loss of $7 billion. A six-week shutdown ending Nov. 12 would cost $11 billion, and an eight-week shutdown concluding Nov. 26 could reduce GDP by $14 billion.
The labor market is also affected, as furloughed federal employees are largely counted as unemployed or on temporary layoff by the Bureau of Labor Statistics. If all October furloughed workers were classified this way, the unemployment rate would rise by 0.4 percentage points.
This shutdown, the second-longest in US history, began on Oct. 1 after federal spending negotiations collapsed. Thousands of federal employees have been furloughed, and many government services have been curtailed or halted entirely.
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