US federal government shutdown could cost economy up to $14B: Budget office
ISTANBUL
The federal government shutdown in the US could cost the American economy between $7 billion and $14 billion, reducing fourth-quarter gross domestic product (GDP) by up to 2% due to a spending slip, the Congressional Budget Office (CBO) said Wednesday.
The shutdown is on day 29, Wednesday, with no end in sight. Senate Democrats sought negotiations to extend expiring federal tax credits to assist Americans with private health insurance coverage through the Affordable Care Act, also known as Obamacare. But Senate Republicans urged Democrats to embrace a stopgap plan to fund government agencies through Nov. 21.
The CBO said postponing federal expenditure on goods and services, employee remuneration, and food stamp benefits that help low-income Americans pay for food would have a negative effect on the economy.
“The effects of the shutdown on the economy are uncertain. Those effects depend on decisions made by the Administration throughout the shutdown. In addition, how federal employees and contractors respond to the delay in compensation is uncertain,” it said.
If the shutdown ends this week, the economy would suffer a permanent loss of $7 billion, according to the CBO. It would cost $11 billion for a six-week shutdown ending Nov. 12, and $14 billion for an eight-week shutdown ending Nov. 26.
The shutdown’s effects on the labor market would increase the unemployment rate as the Bureau of Labor Statistics (BLS) counts most furloughed workers as unemployed, or on a temporary layoff, if those workers report that they are furloughed federal employees and are not otherwise temporarily employed, according to the CBO
If all furloughed workers in October were counted as unemployed on temporary layoff, the measured unemployment rate would rise 0.4 percentage points in October.
The shutdown, the second-longest in US history, began Oct. 1 after negotiations on federal spending priorities broke down. Thousands of federal workers have since been furloughed, while government services have been curtailed or suspended.