Moody’s Estimates 1 Month US Shutdown Will Cost $50 Billion

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.

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, Alfonso Esparza 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 has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. 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