If the week-long government shutdown stretches to a month, it would mean a $50 billion blow to the U.S. economy.
That estimate is actually $5 billion lower than the initial estimate of Mark Zandi, chief economist for Moody’s Analytics. He lowered his forecast after the Defense Department recalled nearly half of 800,000 federal employees furloughed last week, and it appeared Congress would quickly approve a measure to pay other furloughed workers retroactively.
So about $200 million a day in pay seems likely to find its way back to the pockets of “non-essential” federal workers.
But that was only a fraction of the potential cost, said Zandi. The indirect impact could be far greater, including:
Housing: “We’ve impacted mortgage origination; that starts to disrupt the housing market that’s been very important to the recovery,” Zandi said.
Tourism: “Travel and tourism are being affected, both by closures of national parks and the lack of visas being issued to foreign visitors,” he said.
Small business: “Small Business Administration lending has been cut off, meaning some small businesses aren’t going to be able to hire the way they had planned,” Zandi said .
Financial markets: “As stock prices fall due to worries about the shutdown, that means less wealth and that leads to less consumer spending,” he said.
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