Moody’s Forecasts Cost of US Government Shutdown

“The effects build over time: Two weeks is worse than one week, and three works is still worse than two weeks, and four is still worse than that,” Congressional Budget Office Director Douglas Elmendorf said last week.
Mark Zandi, chief economist and co-founder of Moody’s Analytics, got more specific.
Zandi estimates that a shutdown that lasts just a few days might cost the economy two-tenths of a percentage point of annualized growth during the fourth quarter. That’s the economic equivalent of a smidge.
But if a shutdown runs for three or four weeks? “ would do significant economic damage” — reducing GDP by 1.4 percentage points for the quarter, Zandi said in congressional testimony.
The last time there was a shutdown that long was at the end of 1995, when the government was shut down twice for nearly four weeks combined.
The CBO estimated those shutdowns shaved only about half a percentage point off growth in the fourth quarter of that year.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, he established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza