Skip to main content

The differences aren't small. Experts who dared to estimate the total blow delivered to the economy by the government shutdown are all over the place.

Mark Zandi, chief analyst of Moody's Analytics, said early on the cost would be $55 billion for a one-month shutdown including direct and indirect costs. When 400,000 civilian employees of the Defense of Defense were called back to work, he lowered that to $50 billion.

On the other hand, market research firm IHS Inc. put losses at $160 million day, or about $5 billion for a month-long shutdown.

Goldman Sachs Group Inc. said a month-long shutdown would shave 0.5 percent off fourth-quarter growth in gross domestic product, reducing it to 2.0 percent.

Website OutlineUSA, which boasts no special economic knowledge and takes its information from accounts at news outlets, is keeping a second-by-second running total at shutdowncost.com. As exact as the count appears—the tally when this was written had hit $4.708 billion—it is at best a crude guesstimate.

The 27-day shutdown in 1995-1996 cost the US economy over $2.1 billion in today's dollars, according to the Office of Management and Budget Data.

The reason Zandi's estimate is so huge is that it includes indirect costs. That's a reasonable approach but devilishly hard to quantify. Zandi predicted there would be a slow-down in housing loan originations, which has happened, and there would be severe hits to the stock market, which there haven't been.

Not only are estimates of indirect costs inevitably fuzzy, many of the losses will also almost certainly be covered once the government is fully up and running again.

On other hand, lost wages for many private-sector employees dependent on government spending will not be made up. The CEO of Ridgewells Catering, whose subsidiary CapitalHost is the exclusive caterer for the House of Representatives, says the company has lost about $200,000 from the shutdow so far. More than 60 employees have been furloughed by Ridgewells.

Even if the feds open the doors Thursday, some damage is ongoing. See below the fold:

But, assume for a moment Zandi is right. If the shutdown is terminated late Wednesday when Congress finally votes, as it is expected but not yet scheduled to do, would that mean a $25 billion or so price-tag on the shutdown? Zandi himself says the effects of the shutdown would get worse the longer the government didn't open its doors. So, $20 billion? $15 billion?

The S&P today put it at $24 billion:

The S&P has cut the annualized U.S. growth view closer to 2% from 3%, Bloomberg is reporting.

The ratings agency — which recognizes the Senate deal will be approved — says that the shutdown has taken $24 billion out of the economy and cut 0.6% off of yearly fourth quarter GDP growth.

Unfortunately, we can't garnish the wages of the 32 Republicans and their enablers like Speaker John Boehner who were the force behind the shutdown such as enablers like House Speaker John Boehner, for example.

Here are some more examples of the impact of the shutdown:

Some states are seeing a large rise of first-time unemployment compensation claims. Although the total won't be announced until Thursday, the numbers will be considerably above previous weeks.  There is a separate count for federal employees who have been furloughed. Maryland officials has seen some 20,000 initial applications for unemployment compensation from federal workers in the past two weeks. Normally, they see 2,500 to 3,000 a year.

Consumer confidence, which plummeted when the shutdown began, has led to a decrease in spending. Exactly how much is bound to remain blurry. But the drop may cut October new-vehicle sales by as much as 10 percent, according to John Krafcik, chief executive officer of Hyundai Motor Co.’s U.S. sales unit.

In Florida, state revenues may have been hurt by the shutdown. A report by a business-oriented think-tank. But it presents no hard figures, merely the assertion that millions in tax revenues will be lost.

Eighty fishing-boat captains docked in Dutch Harbor, Alaska, would normally be out gathering King Crabs right now during the short catch season. Instead, they're awaiting federal permits, which they obviously can't get until there are employees to approve them. The cost: An average of $1,000 lost each day per boat. Not only are they losing money, each day they aren't out is another for the Russian fishing fleet to corner the market.

Originally posted to Meteor Blades on Wed Oct 16, 2013 at 02:33 PM PDT.

Also republished by Daily Kos.

Tags

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site