Federal shutdown costs US economy $3bn

29 Jan 19

The federal shutdown cost the US economy $3bn and could shave 0.2% from the country’s growth in 2019.

The Congressional Budget Office estimates overall damage from the five-week partial closure amounted to about $11bn, although much of that would be recovered as the government reopens.

The CBO said: “[The] shutdown dampened economic activity mainly because of the loss of furloughed federal workers’ contribution to GDP, the delay in federal spending on goods and services, and the reduction in aggregate demand – which thereby dampened private-sector activity.”

A quarter of the federal government was shut down on 22 December in a row over funding for a wall on the US southern border.

It was reopened yesterday for three weeks after 35 days – making it the longest shutdown in history – to give the Democrats and Republicans time to negotiate federal spending plans.

President Donald Trump insists the wall will still be built.

The statement from the CBO also indicated that new trade tariffs could knock about 0.1% off growth up until 2029

The US has imposed a number of tariffs on countries around the world over the last year and is working to resolve an escalating trade war with China.

CBO is a federal agency with a mandate to analyse the economy and budget for Congress, and released the estimates on Monday along with its broader annual outlook.

Prior to the shutdown, the US economy was expected to grow by about 2.3% this year.

Growth is expected to decelerate further, to an annual average of 1.7% through to 2023.


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