The Government Shutdown Cost The Economy $11B, Including A $3B Permanent Loss

Samira Bouaou/The Epoch Times / CC BY 2.0 / Flickr

The CBO said the number reflects "lost output from federal workers, delayed government spending and reduced demand."

According to the Congressional Budget Office, the government shutdown cost the economy $11 billion, reports CNBC. This number reflects "lost output from federal workers, delayed government spending and reduced demand."

The report estimated a hit of $3 billion to economic activity in the fourth quarter.

Much of the damage is reversible as the government starts up again and federal employees return to work, but $3 billion in economic activity has been permanently lost.

The report said ““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.”

Some indirect implications of the government shutdown are not recorded in the report, such as the delay in federal permits and less access to loans.

The report warned that the risks of the shutdown were becoming “increasingly significant” the longer it continued, as businesses were beginning to postpone normal operations such as hirings and investments.

Democratic Representatives John Yarmuth, chairman of the budget committee, and Tom O’Halleran of Arizona, co-chairman of the Blue Dog Coalition, initially requested the CBO report.

In a statement, Yarmouth said “I am hopeful that we have finally reached a turning point with these mindless shutdowns, but this CBO estimate serves as a stark warning to President Trump on the consequences of using American workers as a bargaining chip.”

The report also assessed the impact of the new Trump administration trade policies on the economy. CBo estimates that new tariffs on imports and exports will bring economic growth down an average of 0.1 percent through 2029. Customs duties are also predicted to rise from 0.2 percent of GDP in 2018 to 0.3 percent in 2019.

The CBO predicts that economic growth will slow to 2.3 percent in 2019 compared with 3.1 percent in 2018. Growth is expected to be 1.7 percent average below CBO’s estimate of the economy’s potential through 2023.

The estimate for when the deficit will hit the $1 trillion mark was pushed by to 2022. Finally, the CBO projected interest rates won’t rise as fast as previously forecast.