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As of this week, the government shutdown is now the longest in U.S. history.  Granted, it is only a partial shutdown. Previous wholesale shutdowns occurred in January 2018 over immigration (specifically saving DACA-Deferred Action for Childhood Arrival) which lasted 3 days and October 2013 (over saving Obamacare) which lasted 16 days.

These prior shutdowns can be used to estimate the economic impact of the current one.   According to the Office of Management and Budget, the October 2013 government shutdown lowered real GDP growth by 0.2% to 0.6% – or somewhere between $2 billion and $6 billion in lost economic output.  It is estimated the current shutdown is knocking off anywhere from 0.1% to 0.5% of GDP per day.  It will take quite a while for the actual impact to show up in economic stats.

The economic statistics that various government agencies publish are the lifeblood of economists.  Divining the economic status of the US has taken a hit as government reports are now being delayed or, worse, not released for review.  The US Dept of Commerce’s Bureau of Economic Analysis and Census Bureau announced they would not publish economic data during the ongoing shutdown.  Reports impacted include key figures on GDP, inflation, personal income & spending and new home sales.  On a positive note, the Labor Department will continue to release data regarding new claims for jobless benefits, the monthly employment report and other inflation measures they track.

As of now, it is estimated 800,000 federal employees are not being paid.  Within the FBI, an estimated 5,000 of the bureau’s 35,000 agents, analysts, lawyers and other personnel have been furloughed, limiting support for some surveillance and laboratory operations. Within the TSA (Transportation Security Administration), workers are also not getting paid.  Approximately 51,000 officers are deemed essential and are ordered to work.  Unfortunately, many have begun to call in sick.  The TSA reported unscheduled absences of its passenger screeners reached 7.6% Monday, twice the rate from a year ago.  Once the government reopens, these employees will receive back pay.  So, the reality is many of these individuals are not working and will eventually get paid for doing nothing.

Government shutdowns are now a familiar occurrence to most Americans.  Since the Congressional Budget Act of 1974, Congress has failed to authorize funding for the federal government on 22 separate occasions.  Most of these shutdowns didn’t affect the functioning of government at all.  This one, however, could.

By |2019-01-23T21:30:03+00:00January 8th, 2019|Categories: On Our Minds|Tags: , , , |0 Comments

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