The record-long partial government shutdown will ultimately only cost the economy $3 billion in lost commerce, the Congressional Budget Office estimated Monday.
Economic growth for the end of 2018 and the beginning of 2019 will be down significantly because of the shutdown, the CBO reported Monday, but much of that lost activity is deferred rather than lost. The CBO estimates that the economy produced about $11 billion less during the shutdown period than it would have if the government had stayed open, but that most of the lost output — $8 billion worth — will be restored by correspondingly faster growth in the future.
Those figures do not necessarily reflect the overall impact of the shutdown on government contractors and employees. Contractors may not receive back pay, if they still have their jobs, though federal workers will.
“Underlying those effects on the overall economy are much more significant effects on individual businesses and workers,” CBO wrote in a special analysis of the impact of the shutdown. “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.”
The CBO expects most economic activity to recover thanks to parts of the federal government returning to work and federal workers receiving back pay. But it does not estimate the cost of other indirect effects caused by the shutdown. For instance, it doesn’t consider the effects of the shutdown on businesses that lost deals because of a lack of government certification or permitting, or businesses that couldn’t receive loans as a result of the shutdown.
