CBO: Shutdown Cost U.S. Economy $3 Billion

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The longest partial USA government shutdown on record that ended Friday cost the United States economy billions of dollars as it kept a fourth of federal agencies shuttered for five weeks, the Congressional Budget Office said Monday.

According to the CBO's report, the GDP was down by a total of $11 billion due to the shutdown but was expected to recover $8 billion later in the year - meaning $3 billion would never be recovered.

The shutdown is projected to lower America's gross domestic product by $3 billion in the fourth quarter of 2018, as well as by $8 billion for the first quarter in 2019, the CBO said. The CBO says the shutdown will have a modest negative impact on the economy, lowering projections of economic growth by 0.4 percentage points to 2.1 per cent in the first quarter, though the economy is expected to mostly make up for it over the rest of the year.

That figure captures lost output from furloughed federal workers, delayed government spending on goods and services and dampened private sector activity resulting from the shutdown.

The shutdown was caused by President Trump's refusal to accept any government funding plan that didn't include money to construct a wall along the U.S. -Mexico border.

The nonpartisan Congressional Budget Office (CBO) said the cost of the shutdown will make the U.S. economy 0.02 percent smaller than expected in 2019.

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The $3 billion reflects a hit of 0.1 percent to economic activity during the fourth quarter of 2018 - an amount that will be permanently lost. Funding for the government is due to run out by mid-February and Trump told The Wall Street Journal on Sunday that the odds were below 50 per cent that lawmakers would reach a deal on border security he would find acceptable.

And the CBO report said its estimate did not reflect indirect costs which were hard to quantify but which were "probably becoming more significant" as the government freeze went on.

The fourth quarter of past year saw economic growth drop by 0.2 percentage points, and the first quarter of 2019 has seen it drop by.4 percentage points.

U.S. President Donald Trump in the Roosevelt Room of the White House in Washington, Friday, Jan. 25, 2019. More significant effects will be felt by individual businesses and workers, particularly those who went without pay. "Some of those private-sector entities will never recoup that lost income", the CBO stated.

House Budget Committee Chairman John Yarmuth (D-Ky.) said the CBO's report confirmed the shutdown had "a debilitating effect on our entire economy".