Shutdown took $24 billion bite out of economy

The United States may have dodged an economic catastrophe by raising the debt ceiling and opening the government, but it didn’t emerge from the political debacle unscathed. The 16-day government shutdown took a $24 billion chunk out of the U.S. economy, according to an initial analysis from Standard & Poor’s.

As a result, the rating agency projects that the U.S. economy will grow 2.4% in the fourth quarter — as opposed to the roughly 3% growth rate predicted prior to the shutdown.

“Because it’s happening all at once, so quick, so fast, unplanned; it’s going to hurt,” said Beth Ann Bovino, U.S. chief economist at S&P. “We can absorb it, but it still hurts.”

Related: Congress votes to do its job, but the fights aren’t over

Hundreds of thousands of federal workers were furloughed during the shutdown, but that was just one of the widespread effects of the first shutdown in nearly two decades.

Federal contractors also furloughed thousands of employees.

Small businesses reeled from frozen government contracts and stalled business loans.

Closed national parks hit the tourism industry.

Military families saw childcare and other services shuttered.

Consumers, also scared by the debate over raising the debt ceiling, started to cut back.

While federal workers will ultimately receive back pay under the deal, contractors will likely not get their lost wages, Bovino said. And with the deal only guaranteeing government funding through Jan. 15, many federal workers and contractors may continue to hold back on spending into the holiday shopping season.

“That’s going to keep people a little more cautious, particularly government workers and certainly contractors,” she said “It certainly suggests a ho-hum holiday.”

The debt fix is also only temporary, which could continue to fuel economic uncertainty, hurting consumer confidence and slowing hiring, said Mark Zandi, chief economist for Moody’s Analytics.

Zandi blamed continued government brinksmanship as a major factor holding back the U.S. economic recovery.

“This is a real corrosion on the economy,” Zandi said. “If we have to go down a similar road in the near future, the costs are going to continue to add up.”

447 Responses to Shutdown took $24 billion bite out of economy

  1. This article is a home run, pure and simple!

  2. Why do I bother calling up people when I can just read this!

  3. The voice of rationality! Good to hear from you.

  4. Also my Cholesterol is 225, does that mean I should have less than the average person? How much is the right amount?They did not tell me what my good cholesterol vs my bad cholesterol is but im concerned with how much intake I should allow.

  5. That insight would have saved us a lot of effort early on.

  6. Good points all around. Truly appreciated.

  7. De Laurentiis va in affondo sull’asso della Fiorentina dopo il sorteggio dei calendari:“Jovetic è molto interessato al denaro. I suoi interessi lo porteranno sicuramente in Inghilterra. Nel calcio vengono fatti insani errori. Sopportiamo e supportiamo tutto, con i nostri investimenti facciamo pagare gli stipendi degli altri”.QUINDI:si è capito che non si è trovato l’accordo per l’ingaggio di Jovetic……..

  8. township says:

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  12. Sending someone harassing mail is NOT free speech. They can say whatever they want on the sidewalk. But sending me hate mail because I am excercising my free speech via a campaign sign… that’s dispicable.

  13. You write so honestly about this. Thanks for sharing!

  14. auzi…. amore… ia zi… chestia cu regulile a tintit in mine direct?? stii doar ca imi astern gandurile pe foaie(sau comp) asa cum imi vin amestecate, confuze… am gasit un blog interesant.. o sa ma apuc sa il urmaresc

  15. I thank you humbly for sharing your wisdom JJWY

  16. Ernest was the sweetest man I know he was a inspiration to others and I was wanting to see him before I left Wisconsin in March 2010 I wish I would have went to see him. He will be dearly missed. Bless you and your family.

  17. lovely view from your room and great to read your post.i like the quilt blocks. do you hand sew or machine? i made a small quilt and did it by hand, but it took me forever and i didn’t add a backing, so stitching unravelled often. it was very zen when i was doing it though.

  18. Seriously Anson, you seldom make it though a topic without some stupid or irrelevant comment. You simply cannot make a straightforward reply. Maybe you should give up.

  19. Well macadamia nuts, how about that.

  20. I agree that it is very clear that the VP does not have a vote in this. The 12th Amendment is very specifically talking about Senators only in the clause.I also do not think the 25th amendment applies. In a tie scenario, the winner of the office would be undetermined, but it would not be a true vacancy.

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