Partial US government shutdown cost economy $3 billion: budget office


The five-week US government shutdown subtracted a total of $11 billion from GDP, about twice the amount President Donald Trump had sought in funding for a border wall, a congressional body said Monday.

The Congressional Budget Office Report predicts a $118 billion increase over last year's $779 billion deficit.

Hall spoke to reporters on Capitol Hill Monday about the CBO's Budget and Economic Outlook 2019 to 2029 report, but was asked to comment on the effects of the Trump shutdown, which the CBO estimated at $11 billion.

Commuters exit the Federal Triangle Metro station after the U.S. government reopened with about 800,000 federal workers returning after a 35-day shutdown in Washington, U.S., January 28, 2019. The CBO estimated that the shutdown delayed $18 billion in federal discretionary spending.

President Donald Trump on Friday agreed to legislation reopening the government, ending the partial shutdown that began December 22, when he and congressional Democrats clashed over the president's demand to build a wall along the Mexican border.

While the CBO estimated that the USA economy will recover $8 billion as business activity resumes and workers are paid, some $3 billion in lost economic activity will never be recovered.

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The budget office concluded that the economy likely suffered during the shutdown because the 800,000 federal employees who went without pay spent less money, the government reduced spending on services, and there was an overall decrease in demand.

The shutdown was spawned over Trump's demand for $5.7 billion for a border wall to thwart illegal immigration, perhaps his most prominent 2016 campaign pledge during his successful run for the presidency.

The report discussed other indirect effects of the shutdown as well, which it said were hard to quantify.

"Underlying those effects on the overall economy are much more significant effects on individual businesses and workers", the report said. That caused them to spend less at "private-sector entities", some of which "will never recoup that lost income", the report says. The nonpartisan office estimates that shaved about $3 billion, or 0.1%, from inflation-adjusted gross domestic product in the fourth quarter and $8 billion, or 0.2%, from that of the first quarter of 2019. On Friday, President Donald Trump signed legislation to reopen the government for three weeks, until February 15.

Trump said he would be willing to shut down the government again if lawmakers do not reach a deal he finds acceptable on border security.

The report says that because of the shutdown, which lasted from December 22 through last Friday, about $18 billion in discretionary government spending was delayed.