The ongoing federal government shutdown is delivering a $7 billion monthly blow to the US economy, according to a new estimate from the nonpartisan Congressional Budget Office. In a letter to lawmakers, the CBO projected that a four-week shutdown, a mark reached Wednesday, would shrink real GDP by $7 billion, with losses mounting to $11 billion if the shutdown drags to six weeks and $14 billion at the eight-week mark, NBC News reports. Much of the lost economic activity is expected to rebound after the government reopens, but the CBO says its figures are for economic output that will be lost for good.
The report points to more than a million federal workers missing paychecks, with roughly 650,000 furloughed and 600,000 still on the job but unpaid. While military members and some law enforcement personnel continue to be paid thanks to reallocated funds, the majority of federal employees are feeling the pinch. Federal law requires that all affected workers receive back pay once the shutdown ends, but the CBO says that won't erase the broader economic hit. The CBO estimated GDP in the fourth quarter will be 1% to 2% lower as a result of the shutdown.
The agency notes that spending on goods and services drops during a shutdown, only to bounce back afterward. The overall effect, however, is negative compared to if the government had stayed open, and the damage only grows as the impasse continues. "The effects of the shutdown on the economy are uncertain. Those effects depend on decisions made by the Administration throughout the shutdown," CBO Director Phillip Swagel wrote in the report, per Politico.
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The report was prepared in response to a request from House Budget Committee Chair Jodey Arrington. The Hill reports that the Republican slammed Democrats on Wednesday for "playing politics," saying that this Halloween, they are "all trick and no treat."
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