Estimate: The Shutdown Caused $24 Billion in Damage to the Economy
by Nick Schwellenbach, 10/17/2013
The nearly two-and-a half week government shutdown cost the U.S. economy some $24 billion, according to an estimate by financial company Standard & Poor’s. Similarly, market research firm Moody’s Analytics came up with a nearly identical number of $23 billion, or $1.4375 billion per day.
TIME Magazine broke down many of the major costs of the shutdown:
- About $3.1 billion in lost government services, according to the research firm HIS
- $152 million per day in lost travel spending, according to the U.S. Travel Association
- $76 million per day lost because of National Parks being shut down, according to the National Park Service
- $217 million per day in lost federal and contractor wages in the Washington D.C. metropolitan area alone
“The bottom line is the government shutdown has hurt the U.S. economy,” according to the Standard & Poor’s statement. “In September, we expected 3% annualized growth in the fourth quarter because 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. Since our forecast didn't hold, we now have to lower our fourth-quarter growth estimate to closer to 2%.”
Fiscal crises and the austerity budgets they have generated over the last several years have had a much larger cumulative impact on economy. In total, the fiscal path the U.S. has been on has cost the United States an estimated $450 billion in lost economic output and 2.1 million jobs, according to a report from Macroeconomic Advisers. This is mostly due to cutbacks in discretionary spending.
More cuts will slow the economy further. And there is little need to focus on deficits in the near term since they have plummeted. “We are baffled by the idea that the pace of deficit reduction needs to be increased, given how rapidly the picture is improving already,” Ian Shepherdson, the chief economist of Pantheon Macroeconomics, wrote in a note to clients, according to The New York Times.