"The Government Shutdown Has Cost The Economy $24 Billion"
CREDIT: AP Photo/Carolyn Kaster
Standard & Poor’s calculates that the shutdown that has so far lasted just over two weeks has taken $24 billion out of the economy, shaving at least 0.6 percent off of GDP in the fourth quarter.
The agency had originally predicted a 3 percent growth rate in GDP this quarter, noting that “we thought politicians would have learned from 2011 and taken steps to avoid things like a government shutdown and the possibility of a sovereign default.” But now recognizing that “our forecast didn’t hold,” it has reduced that estimate to 2 percent.
While it notes that it believes the current deal to re-open the government and avoid a default will pass, it also warns that every day that the United States gets closer to defaulting on its debt by not raising the debt ceiling will take a toll on the economy.
When the government first shut down, IHS Inc. predicted that it would cost the economy $300 million a day in lost economic output. These estimates likely don’t take all the effects into account, however. Loans haven’t gone out from the Small Business Administration, permits have been held up, and government contracts have been put on hold. Communities near shuttered National Parks have lost $76 million a day. The government stands to lose out on billions in tax revenues.
If it continues into late October or November, states have warned that a variety of public assistance programs, such as food stamps, welfare, and nutrition for low-income moms and infants, will stop issuing benefits.