Government shutdown wipes billions off US economy
The five-week shutdown of the US Government knocked $8bn (£6.08bn) off America’s gross domestic product (GDP) in the first quarter of this year.
The Congressional Budget Office (CBO) – the US spending watchdog – said $3bn was also wiped off GDP in the fourth quarter of last year due to reduced economic activity during to the shutdown, which was sparked by a row over funding for Trumps $5.7bn border wall.
Most of the GDP that was lost during the partial government closure, which ran from 22 December 2018 to 25 January this year, will be recovered but the CBO estimated that around $3bn will not be recouped.
The level of GDP for the full calendar year is expected to be 0.02 per cent smaller than it would have been had the shutdown not occurred.
“In CBO’s estimation,” the report said, “the shutdown dampened economic activity mainly because of the loss of furloughed 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).”
Thousands of federal employees were ordered back to work without pay during the 35-day impasse over the border wall funding, which Trump eventually failed to secure.
Read more: Trump orders thousands of employees back to work during government shutdown
The report added: “Underlying those effects on the overall economy are much more significant effects on individual businesses and workers.
“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.”