Despite persistent gross domestic product growth and consistent consumer confidence, the economy has been on tenterhooks for months. And now adding to the burden of overheated markets desperately in need of corrections and President Trump’s tariffs is the government shutdown.
JPMorgan Chase CEO Jamie Dimon worried to reporters that continuing our record-long shutdown through the first quarter of the year could wipe out that quarter’s whole economic growth — previously forecast to surpass 2.5 percent. The White House’s own economic adviser, Kevin Hassett, estimates that the shutdown reduces our projected first quarter economic growth by 0.13 percentage points every week.
A major factor here is the uncertainty being created. The loss of an average of $5,000 of pay for 800,000 federal employees alone harms the economy with both decreased consumer spending and investment. But even more foreboding is the prospect of the public overall getting spooked from investing as it becomes increasingly clear that all of the negotiating parties have come to an effective stalemate over the shutdown, with no signs of relenting.
Shutdowns tend not to save money, ironically. The 2013 shutdown cost the American taxpayers $2.5 billion. Workers sent home without pay during the shutdown had to be paid, retroactively, for zero labor.
Federal attractions have lost $6 million in entrance fees, while (presumed) back pay adds up. Businesses in areas as wide-ranging as Washington to Wichita have seen lower revenue streams as unpaid federal workers have cut back spending.
