U.S. Economy Permanently Lost $3B From Shutdown, CBO Finds

U.S. Economy Permanently Lost $3B From Shutdown, CBO Finds

The 35-day shutdown, which arose as a result of a dispute over funding for a U.S. -Mexico border wall favored by President Trump, will cost the U.S. economy $11 billion, according to the CBO's report.

With public services including aviation safety beginning to buckle under the strain of withheld wages and suspended operations, Trump agreed Friday to reopen the federal government temporarily but with no additional funding for the wall.

A federal worker stands with a placard reading "Will Work For Pay" as other federal employees stage a rally to call for a vote on the shutdown on Capitol Hill in Washington, Jan. 23, 2019.

However, the CBO said most of the lost output "will eventually be recovered", with second-quarter growth expected to bounce back.

Some of the affected private-sector businesses will never recoup the income they lost, CBO said.

That means the shutdown will most likely influence monetary policy this year, he said.

"CBO's estimates do not incorporate other, more indirect negative effects of the shutdown, which are more hard to quantify but were probably becoming more significant as it continued", the report said. "If President Trump didn't appreciate the error of his ways after seeing the human suffering his needless shutdown caused, maybe the extensive economic damage he inflicted will set the president straight: No more Trump Shutdowns".

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More broadly, the report estimates a drop in GDP growth to 2.3 per cent this year as the effects of President Donald Trump's tax cut on business investment begin to drop off.

"Government is open again, but we can not forget what shutdowns mean: unnecessary anguish for millions of Americans", said Rep. Madeleine Dean of Pennsylvania in a tweet.

USA federal government worker Yvette Hicks, whose status as a contractor means she will receive no back pay from the 35-day shutdown, cries in frustration as she talks about her situation at her home in Washington on Friday. On Friday, President Donald Trump signed legislation to reopen the government for three weeks, until February 15.

Trump's proposed border wall, which was outright rejected by Democratic leaders Chuck Schumer and Nancy Pelosi, would have cost $5.7 billion, just under half the money lost during the shutdown. Federal contractors and businesses that relied on federal workers' business, however, face huge losses, although some lawmakers are pushing legislation to pay contractors back as well.

The report, which was released Monday, estimated a hit of $3 billion, or 0.1 percent, to economic activity during the fourth quarter of 2018.

The five-week shutdown also delayed about $18 billion in federal discretionary spending.

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