Government Shutdown Bleeds Billions from Economy Weekly
The ongoing U.S. government shutdown is critically impacting the national economy. As bipartisan talks to resolve the deadlock continue, the economic fallout intensifies. Experts have highlighted the visible and lasting loss of economic activity due to this shutdown, which has now extended to 38 days.
The Economic Toll of the Government Shutdown
Economic experts estimate that the shutdown is costing the U.S. economy between $7 billion and $16 billion weekly, with a forecasted loss of about $15 billion according to the White House’s Council of Economic Advisers. A recent survey revealed that 54% of Americans express deep concern over the economic effects of the shutdown.
Impact on Federal Workers
- Approximately 670,000 federal employees are furloughed.
- Another 730,000 are continuing to work without pay.
Many federal workers face financial hardships, prompting some to seek temporary employment or loans. A report from the Congressional Budget Office warned that reduced work hours might lead to a loss of $14 billion for the economy by year-end if the shutdown prolongs until Thanksgiving. Though back pay is expected, reduced spending by employees could have wider impacts.
Effects on Consumers
An interruption in food stamp benefits has left over 40 million Americans struggling. Mark Zandi from Moody’s Analytics noted that this could diminish consumer spending significantly. Although a federal judge ordered the restoration of full benefits, financial strains persist for many households, exacerbated by rising healthcare costs under the Affordable Care Act.
Challenges for Small Businesses
Small businesses are particularly vulnerable as many depend on government contracts and loans. The Small Business Administration reports a loss of $4.5 billion in capital, freezing $170 million in federally guaranteed loans daily. This situation hampers the ability of over 8,300 small enterprises to thrive.
Federal Contractors at Risk
A substantial number of contract workers are also feeling the pinch. Grace Zwemmer from Oxford Economics estimated that around $800 million in federal awards face disruption each week. Approximately 5.2 million federal contractors could experience layoffs or pay cuts if the impasse continues.
The Travel Sector’s Decline
The travel industry is not exempt from the fallout. With the Federal Aviation Administration mandating flight cuts, travel spending losses have already reached around $5 billion, a significant setback just ahead of the peak travel season.
Long-Term Economic Outlook
Overall, the U.S. gross domestic product (GDP) is anticipated to suffer. The CBO predicts that the shutdown may reduce annualized GDP growth by 1 to 2 percentage points in the fourth quarter. Although recovery is expected post-shutdown, lasting economic losses of $7 billion to $14 billion are forecasted, representing only a small fraction of the $30 trillion economy.
As discussions continue in Congress, the urgency to address the government shutdown grows, given its sweeping implications for millions of Americans and the national economy.
