As reported by ABC News, the federal government shutdown will cause about $3 billion of permanent harm to the economy, as shown by a Congressional Budget Office report.
The report said that while most of the loss “will eventually be recovered,” growth has slowed in the near term.
By the end of the year, the CBO predicts that the GDP will be only 0.02 smaller, due to the 35-day shutdown’s effect on the economy.
As the positive effects of Trump’s tax cut on business investment begin to wane, GDP growth will drop to 2.3 percent, down from 3.1 percent last year. The U.S. budget is predicted to reach $897 billion in 2019.
The report said, "The shutdown dampened economic activity mainly because of the loss of furloughed federal workers' contribution to (gross domestic product), the delay in federal spending on goods and services, and the reduction in aggregate demand."
"Underlying those effects on the overall economy are much more significant effects on individual businesses and workers. Among those who experienced the largest and most direct negative effects are federal workers who faced delayed compensation and private-sector entities that lost business. Some of those private-sector entities will never recoup that lost income."
The CBO estimates there will be a $118 billion increase over last year’s $779 billion deficit. Yet, unemployment will drop to 3.5% in the second half of the year, making it the lowest point since the 1960s.
Neither the Democrats controlling the House nor Trump are expected to prioritize decreasing the budget deficit. Trump will likely increase spending for the Pentagon and other federal agencies.
House Budget Committee Chairman John Yarmuth, (D-Ky) said "Republicans' massive tax giveaway to millionaires and big corporations is inflicting serious damage on our budget outlook. We are facing trillion-dollar deficits and an increasingly bleak fiscal future."
More, it is predicted that Trump’s trade policies, such as higher tariffs on Chinese goods, will have a modest negative effect on the economy.