The economic costs of the partial shutdown of the U.S. government for 35 days probably won’t be known for weeks, if ever, because of the difficulty in measuring activity that didn’t take place as a result.
Suffice it to say the shutdown cost the economy billions of dollars in direct and indirect costs and more than the $5.7 billion that the Trump White House had demanded for a border wall with Mexico.
The Congressional Budget Office estimates that the shutdown reduced fourth-quarter GDP by $3 billion, or about 0.1% of GDP, and first-quarter GDP by $8 billion, equal to about 0.2% of GDP, for a total loss of $11 billion. The effect on the annualized growth rate of both quarters will be even larger, according to the CBO.
S&P Global Ratings estimates the 35-day shutdown cost the economy at least $6 billion in direct and indirect costs, including lost productivity from furloughed government workers and contract workers (direct cost) and lost economic activity from outside businesses (indirect costs).
“With a five-week closure we suspect that more of the economic activity indirectly tied to the government may have been outright canceled,” according to S&P Global Ratings, which characterized the longest shutdown in U.S. history as a “nasty flu that had begun to spread across the states.”
The shutdown ended Friday when President Donald Trump agreed to legislation that reopened the government for three weeks, giving Congress a window to develop a deal to fund the Department of Homeland Security and address security at the U.S.-Mexican border.