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US Economists: Billions Lost in Government Shutdown

VOA News
U.S. analysts say that the government's 16-day partial shutdown cost the American economy billions of dollars and that continuing uncertainty about government actions could hurt the economy even more.

The full economic impact of the shutdown has yet to be counted and estimates vary. But the Standard & Poor's credit rating firm said it took at least $24 billion out of the American economy, the world's largest, and slowed the country's economic growth rate. Another research company, Macroeconomic Advisers, put the damage at about $12 billion.

U.S. President Barack Obama delivers remarks on the end of the government shutdown at the White House in Washington, Oct. 17, 2013.U.S. President Barack Obama delivers remarks on the end of the government shutdown at the White House in Washington, Oct. 17, 2013.
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U.S. President Barack Obama delivers remarks on the end of the government shutdown at the White House in Washington, Oct. 17, 2013.
U.S. President Barack Obama delivers remarks on the end of the government shutdown at the White House in Washington, Oct. 17, 2013.
President Barack Obama said Thursday the impasse over government spending and the country's borrowing authority "inflicted completely unnecessary damage" on the American economy.

"These last few weeks have inflicted completely unnecessary damage on our economy," he said. "We don't know yet the full scope of the damage, but every analyst out there believes it's slowed our growth."

While 800,000 furloughed government workers are going to be paid back wages, economists say some businesses affected by the shutdown will not be able to recoup their losses.

The shutdown forced the closing of national parks, costing nearby businesses when customers canceled vacations. Other businesses and farmers were unable to get government approval for loans, or had to pay higher interest rates on short-term bank loans.

The chief economist at the country's largest bank, James Glassman at JPMorgan Chase, told VOA there will be economic losses, but that for many furloughed government employees, the coming days will be like returning from a vacation.

"I think probably the impact is more the uncertainty it created across the country in terms of businesses that have contracts with government," he said. "But the truth is, a couple weeks off everything's flowing again. It won't take long to get back to work and catch up on some of the work that was lost."

The Washington settlement only covers government spending through January 15 and extends the government's borrowing authority through February 7. S&P said the short-term deal - and the possibility of another standoff in a few months, could weigh on consumer confidence during the holiday shopping season in November and December.

S&P said consumers may "remain afraid to open up their checkbooks."

Economist Joel Prakken at Macroeconomic Advisers says the U.S. has lurched from one financial crisis to the next over the last several years, costing the country about one percentage point of economic growth annually since late 2009. The U.S. has had to repeatedly increase it borrowing limit because the government spends more than the amount of revenue it takes in through taxes and other fees.

"We have a measure of policy uncertainty that since 2009 has been quite elevated relative to the previous quarter of a century," he said.

Prakken attributes Washington's budget disputes to a long-running debate over the role of government in American life, how big it should be and what it should do.

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