US shutdown subtracted $11 bn from GDP: report

The five-week government shutdown subtracted $11 billion from the US economy, about twice the amount President Donald Trump sought to fund a border wall, an independent congressional body said yesterday. However, all but $3 billion, or 0.02 percent of GDP, will eventually be recovered as the government resumes operations, the non-partisan Congressional Budget Office said in a report.

The estimate suggested the damages from the political brawl in Washington were significant but stopped short of the far worse harm that could have occurred had it been allowed to continue. “Underlying those effects on the overall economy are much more significant effects on individual businesses and workers,” the report said. “Some of those private-sector entities will never recoup that lost income.”

Growth in subsequent quarters this year should see a small, temporary bounce, compensating for the losses in the final quarter of 2018 and the start of 2019, the report said. The partial shutdown, the longest in US history, left some 800,000 federal workers either working without pay or furloughed although they are due to receive back pay this week. But government contractors, including hourly workers, may not be compensated for lost income.

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. In a signature pledge from his 2016 campaign, Trump claimed the barrier would stem illegal immigration and drug trafficking, a claim Democrats have rejected.