A shutdown of the U.S. government would reduce fourth-quarter economic growth by as much as 1.4 percentage points depending on its length, economists say, as government workers from park rangers to telephone receptionists are furloughed. A shutdown would slow the expansion because output lost when workers are furloughed subtracts from gross domestic product. The combined prospect of a budget standoff between the White House and Congress and haggling over the debt ceiling could have a bigger impact on the economy as businesses hold off on investment and households delay spending. A shutdown wouldn’t be unprecedented: 17 funding gaps happened between 1977 and 1996, and in 1995 and 1996 shutdowns cut GDP by 0.25 percentage point in the fourth quarter of 1995.
What Would it Cost to Shutdown the US Government?
