Government Shutdown Cost US Economy $3 Billion

Government shutdown projected to cost American economy $3 billion

U.S. Economy Permanently Lost $3B From Shutdown, CBO Finds

The longest partial USA government shutdown on record that ended Friday cost the United States economy billions of dollars as it kept a fourth of federal agencies shuttered for five weeks, the Congressional Budget Office said Monday.

The 35-day shutdown ― the longest such closure in USA history ― reportedly reduced GDP in the fourth quarter of 2018 by $3 billion and an additional estimated $8 billion in the first quarter of 2019 in relation to what it would have been otherwise.

In a separate report, CBO estimated the five-week partial government shutdown, which ended January 25, will reduce inflation-adjusted gross domestic product in the fourth quarter of 2018 by $3 billion, or 0.1 percent, and in the first quarter of 2019 will be cut by $8 billion, or 0.2 percent, compared to what it would have been without a government closure.

As Donald Trump threatens another government shutdown, Congressional Budget Office (CBO) Director Keith Hall warns that another shutdown would increase the risk of "security incidents".


That figure captures lost output from furloughed federal workers, delayed government spending on goods and services and dampened private sector activity resulting from the shutdown.

President Donald Trump and Democratic and Republican congressional leaders agreed to end the shutdown and created a bipartisan panel to negotiate security provisions along the U.S. -Mexico border.

Overall, the USA economy lost about $11 billion during the five-week period, the report said.

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.


"Underlying those effects on the overall economy are much more significant effects on individual businesses and workers", the report said. The president, however, appeared less than optimistic about reaching a deal on border security, telling the Wall Street Journal that he puts the odds at less than "50-50" that lawmakers will make the deadline. The impact was projected to be greater during the first quarter of 2019: $8 billion, or 0.2 percent of GDP.

Some of the affected private-sector businesses will never recoup the income they lost, CBO said.

The CBO report serves as a stark warning to Trump against another shutdown, said U.S. Representative John Yarmuth, the Democratic chairman of the House Budget Committee. Of course, this prediction is based on the assumption that the federal government will not shut down for a second time on February 15.


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