US government shutdown cost $11 billion
The US government shutdown had a devastating effect on the economy.
While the US government shutdown is over for now, the economic costs will still linger. The cost of the last government shutdown topped $11 billion, $3 billion of which can never be recovered.
Why did the US government shutdown cost so much?
The US government shut down for 35 days because Democrats in Congress wouldn’t vote for a border wall for the US-Mexico border that US President, Donald Trump, wanted. Since the US government re-opened, The Congressional Budget Office(CBO) analysed the financial impact on the country. The CBO wrote in a recent report that the shutdown cost the US economy $11 billion. The office noted that the loss of revenue was because 800,000 government workers were furloughed and didn’t receive paychecks for 35 days.
‘In CBO's estimation, the shutdown dampened economic activity mainly because of the loss of furloughed federal workers' contribution to GDP[gross domestic product], the delay in federal spending on goods and services, and the reduction in aggregate demand’, said the report.
The CBO also noted that not only did federal workers suffer during the economy.The office wrote that small business owners who needed government services also were disadvantaged during the shutdown.
‘Some businesses could not obtain federal permits and certifications, and others faced reduced access to loans provided by the federal government. Such factors were probably beginning to lead firms to postpone investment and hiring decisions,’ noted the CBO.
US Speaker of the House, Nancy Pelosi, said that the CBO report shows that the government gridlock was Trump’s fault and detrimental to the financial state of the country.
‘The President’s shutdown inflicted needless pain and chaos in the lives of millions of Americans, and stole billions of dollars from the economy’, said Pelosi.
Why is Trump threatening another shutdown?
Despite the temporary truce to re-open the government, Trump revealed in an interview that another shutdown is ‘certainly an option.’ He is threatening another stoppage if there isn’t funding for a border barrier.
Trump also said that there was a slim chance that a bipartisan group of members of Congress could come to an agreement on keeping the government open.
‘I personally think it’s less than 50-50, but you have a lot of very good people on that board,’ said Trump.
With a temporary end to the government impasse, Transportation Security Agency officer, Becky Mancha, is concerned about being out of work again in three weeks.
‘It's hard to know that I have to go through this when I'm doing my job. It's very scary to know that that in 21 days it can happen all over again,’ said Mancha.
This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Live prices on most popular markets
You might be interested in…
Find out what charges your trades could incur with our transparent fee structure.
Discover why so many clients choose us, and what makes us a world-leading provider of spread betting and CFDs.
Stay on top of upcoming market-moving events with our customisable economic calendar.