The record partial government shutdown could cost the US economy more than the $5.7 billion which President Donald Trump has demanded to fund his proposed border wall.
Beth Ann Bovino, the chief US economist for S&P Global, estimated in a research note on January 11 that every week of the shutdown would shave around $1.2 billion off the US’s GDP.
The US is now in an unprecedented fifth week of the shutdown. According to this projection, by some time around Friday January 25, the total damage will have surpassed the $5.7 billion which prompted the shutdown in the first place.
Bovino also estimated that the amount of damage done per week will increase as the shutdown continues. “The longer this shutdown drags on, the more collateral damage the economy will suffer,” she wrote.
Given this effect — which Bovino did not quantify — the psychologically significant $5.7 billion figure may be reached sooner.
The shutdown started December 22 after Democrats refused President Donald Trump’s demand that a spending bill to keep the government open include billions of dollars in funding for a wall along the southern US border.
Democrats rejected Trump’s offer of a compromise deal on Friday. It offered protection for so-called Dreamers — undocumented immigrants brought to the United States as children— as well as other groups of immigrants, in exchange for wall funding.
House Speaker Nancy Pelosi called the deal “unacceptable” while Senate Minority Leader Chuck Schumer described Trump’s strategy as “hostage-taking.”
As the shutdown continues, more economists are warning of a doomsday scenario.
JPMorgan CEO Jamie Dimon d escribed the shutdown as a serious problem for the US economy, citing research that found US GDP growth could plummet to zero if the shutdown continues.
A White House official told Business Insider that the Trump administration’s own model estimates the shutdown would eat 0.13 percentage points of GDP growth for every week of the shutdown — higher than the 0.05 percentage points originally assumed.
TSA chaos, schools lunches under threat, national parks overflowing with trash: Other effects of the shutdown
- More than 3,000 TSA screeners — one in 10 — missed work over the holiday weekend. TSA officials said that the rate is almost triple what it was on the same day last year.
- Schools are worried about being able to feed children their lunches if the shutdown continues. At least one school district is already cutting back on children’s meals, no longer offing bottles of water and juice and reducing the amount of fruit and vegetables given to children.
- Critics say that’s Trump’s “compromise” proposal to re-open the government isn’t a compromise at all, and point out that Trump himself is the one that rescinded protections for Dreamers.
- National parks struggle, facing piles of trash and damaged trees.
- Secret Service agents are working with no pay, and some say they are finding it hard to make ends meet and that financial worries could affect performance on the job.
- Cybersecurity experts say the shutdown is putting the US is at greater risk of attack.