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October 17, 2013 at 10:17 AM
The costs and impact to the country and its citizens in the wake of Tuesday’s deal to end the government shutdown and raise the debt ceiling began to be tallied Thursday, as federal employees returned to work after more than two weeks.
“[L]et’s be clear: There are no winners here,” President Barack Obama said from the White House Wednesday morning. “These last few weeks have inflicted completely unnecessary damage on our economy. We don’t know yet the full scope of the damage, but every analyst out there believes it slowed our growth.”
Indeed, Standard & Poor’s said a day earlier that the shutdown “to date has taken $24 billion out of the economy” and “shaved at least 0.6% off annualized fourth-quarter 2013 GDP growth.”
Well-known prognosticators also weighed in. Writing for Business Insider, PIMCO’s Mohamed El-Erian said investors “need only focus on three points: markets were delighted with the “what;” they are worried about the “how;” and the “how” matters going forward.”
“Instead of decisively emerging from a damaging phase of political dysfunction, Congress appears still stuck in what game theorists would call a repeated game with suboptimal outcomes,” El-Erian said.
BlackRock’s Larry Fink told Bloomberg Television that “We are going to see a lower equity market and a longer period of lower rates” if earnings start to deteriorate in the fourth quarter following the stalemate.
Advisors, for their part, were addressing concerns by telling clients to sit tight.
“For the last month, in every client meeting it has been the No. 1 issue,” said Jeffrey Heasley, executive vice president and financial consultant with Pittsburgh-based Private Wealth Advisors. “I tell them that had we actually gone over the cliff, it would have been a game changer, but this is really more about the panic surrounding a default than the effects of a default itself.”
