Trump’s Shutdown Expected to Reduce Economic Growth

JM Ashby
Written by JM Ashby

Economic growth was expected to slow in 2019 in any case, but Trump's ongoing government shutdown may hasten the decline.

Economists surveyed by the Wall Street Journal have reduced their projections for first quarter growth and their projections will likely change again unless the shutdown ends soon.

Economists estimate the furlough of 380,000 federal workers—meaning they take unpaid leave—costs $1 billion to $2 billion a week in lost economic output. That is a rounding error in an economy that produces about $20 trillion in goods and services a year, but it accumulates over time. An additional 420,000 federal workers, deemed “essential,” are working without pay.

The lost output will, to this point, shave between a tenth and a quarter of a percentage point off the economy’s annual growth rate in the first quarter, private-sector economists said. J.P. Morgan projects gross domestic product to grow at a 2% pace this quarter, while Moody’s projects about 2.6% growth. Macroeconomic Advisers expects 1.6% growth.

Whether the economy grows at a rate of 1.6 or 2.6 percent in the first quarter of 2019 -- or somewhere in between -- that would be significantly less than the 3.1 percent growth seen in the first quarter of 2018.

All of these estimates are subject to change because we still don't know how long Trump's shutdown is going to last. We don't know how much longer Senate Majority Leader Mitch McConnell will refuse to hold a vote on a bill to reopen the government.

There's no end in sight right now.

  • muselet

    ‘Senior Trump Official’ On Shutdown: ‘We Do Not Want Most Employees To Return’

    In a sane universe, the public would descend on 1600 Pennsylvania Avenue with pitchforks and torches, metaphorical and otherwise.


  • Badgerite

    I have to wonder if trump isn’t intentionally trying to keep the shutdown going as long as he can so he has something other than his own trade war to blame the effects of his trade war on. He really has no regard whatsoever for the people who voted for him. He sees them as suckers. And also to pretend he is still in control and the last election never happened.
    Distract. Distract. Distract.

  • katanahamon

    Why does the media only report or publicize Rump and the right wing? The Dems and the left are putting out tweets and quotes too, but..where are they?

  • katanahamon

    Sooner or later people won’t work for free. I’d like to think that sooner people will hold Rump accountable for all this. His tweets this weekend were..really out there, pushing even the most abnormal envelope he’s already established. What an embarrassment.