US government shutdown drained $11 billion from GDP, congress report shows

COMPILED FROM WIRE SERVICES
ISTANBUL
Published 28.01.2019 20:31
Updated 28.01.2019 21:26
U.S. President Donald Trump speaks about the government shutdown on January 25, 2019, from the Rose Garden of the White House in Washington, DC. (AFP Photo)
U.S. President Donald Trump speaks about the government shutdown on January 25, 2019, from the Rose Garden of the White House in Washington, DC. (AFP Photo)

The five-week U.S. government shutdown subtracted a total of $11 billion from GDP, about twice the amount President Donald Trump had sought in funding for a border wall, a congressional body said Monday.

In the last quarter of 2018 the economy took a 0.1 percent hit, equal to $3 billion dollars, said the report released by the nonpartisan Congressional Budget Office (CBO).

The loss was even greater during the first quarter of 2019, which is estimated to be $8 billion of the global domestic product (GDP).

The loss reflected a huge loss in output from 800,000 federal workers who were effected by the shutdown, which lasted 35 days, a delay in government spending and an overall reduction in demand.

The CBO noted that eventually the losses will be recovered, except for $3 billion dollars which it said is permanently lost.

"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," the report said. "Some of those private-sector entities will never recoup that lost income."

The report discussed other indirect effects of the shutdown as well, which it said were difficult to quantify. Businesses and firms were delaying hiring and investment decisions due to their inability to obtain federal government loans, permits and certifications.

The CBO warned risks were becoming "increasingly significant as the shutdown continued."

The office projected that the economic growth of the country for 2019 will be 2.3 percent, much lower than the 3.1 percent growth for 2018.

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