Shutdown furloughs will permanently cost the economy at least $7 billion, CBO says

"Forcing a large swath of the federal workforce not to work for going on a full month is having significant and lasting impacts on the economy, according to a non-partisan legislative branch review, causing a loss of at least $7 billion dollars from the gross domestic product. That figure would grow to $11 billion if the shutdown lasts another two weeks or $14 billion if it were to last until Nov. 26, the Congressional Budget Office found in a report on Wednesday."

"Most federal employees are currently either furloughed and not working or excepted, meaning they are working only on the promise of retroactive pay. Because all of those employees will receive back pay-CBO assumed furloughed workers would receive delayed compensation despite the Trump administration's insistence that it does not have to enforce a law that requires it-the loss of economic activity that stems from employees not receiving paychecks will mostly be reversed when the government reopens."

"Already, CBO estimated, GDP is likely to dip by about 1% in the current quarter relative to expectations if no shutdown had occurred. It will then pick back up by 1.4% in the next quarter, according to the analysts' estimates, and then slowly taper back toward normal expectations. The most permanent impact of the shutdown, CBO said, would stem from the output lost from the weeks federal employees spent not working that could never be recovered. That lost productivity, the agency said, will have a permanent impact on the U.S. economy."

The partial federal government shutdown has removed at least $7 billion from U.S. GDP, rising to $11 billion with two more weeks and $14 billion if it continues through Nov. 26. Most federal workers are furloughed or working only on the promise of retroactive pay; back pay will largely restore lost household income-driven spending but will not recover hours of missed work. GDP is projected to fall about 1% this quarter, rebound roughly 1.4% next quarter, and then gradually return toward prior expectations. The most lasting effect will be unrecoverable productivity lost while employees did not work, creating a permanent drag on output.

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