Economy

Government shutdown costs U.S. economy $24 billion, cuts growth by 0.6 percent

150px-Standard&Poors.svgA recent analysis released by Standard & Poor’s found that the government shutdown that began earlier this month and lasted 16 days cost the national economy at least $24 billion and cut 0.6 percent from the country’s growth rate.

S&P said the current compromise reached by the Senate on Wednesday only funds the government through Jan. 15 and raises the debt limit through Feb. 7, meaning the country will face the same battle again soon. S&P warned consumers could have a hard time rebounding in such a short timeframe, The Hill reports.

“The short turnaround for politicians to negotiate some sort of lasting deal will likely weigh on consumer confidence, especially among government workers that were furloughed,” S&P said, according to The Hill. “If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they’ll remain afraid to open up their checkbooks. That points to another Humbug holiday season.”

Another report released by Macroeconomic Advisers for the Peter G. Peterson Foundation found that recurring budget battles have cut economic growth by about 0.3 percentage points per year since 2009, and that they have also added more than 0.5 percent to the annual unemployment rate—approximately 900,000 jobs, Bloomberg reports.

David Carrier, the director of research and chief economist at the National Association of Federal Credit Unions, said that while the government shutdown had a significant economic impact, it could be worse next year.

“There’s an immediate hit from what happened in the last month, but if Congress doesn’t work out their differences over the budget next year, the effects could be worse,” Carrier said.

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