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How much did the shutdown cost the economy?


Shutdowns aren’t cheap. This year’s closure, which ended Thursday, has likely cost the government and the economy billions of dollars, according to economists and policy analysts.

Below are a few of the estimates we’ve seen, plus a video of Federal Diary columnist Joe Davidson discussing the financial impacts:

* $24 billion in lost economic output, or 0.6 percent of projected annualized GDP growth, according to the Standard and Poor’s ratings agency. Similarly, Moody’s Analytics estimated the impact at $23 billion.

The ratings agencies calculate their estimates using complicated formulas that consider past economic behavior, combined with the number of federal employees and contractors who were not paid during the shutdown, according to Moody’s chief economist Mark Zandi.

* $2.1 billion in government costs for the fiscal 1996 shutdowns, calculated in today’s dollars, according to Office of Management and Budget estimates at the time. The impact could be worse this time, since the 2013 shutdown forced more government employees off the job. Most of the cost of the fiscal 1996 closure resulted from agencies paying furloughed workers for hours they didn’t actually work.

* $450,000 a day in lost revenue at National Parks, according to the National Park Service. That was until late last week, when a handful of states agreed to fund operations for the some of the parks within their boundaries.  The costs may have been lower from that point forward, as some parks reopened and began collecting fees again.

The numbers come from top-line estimates by the National Park Service, which made projections based on October 2012 park attendance and fee collections.

$2.4 billion in lost travel spending, based on the U.S. Travel Association’s estimate of $152 million per day. The organization said it based its numbers in part on the National Park Service projections, as well as estimated reductions in business travel for federal employees and the federal government.

Post columnist Joe Davidson, who writes The Federal Diary, explains the costs of reopening the government after it was closed for more than two weeks. (The Washington Post)

Bonus material:

As most politics junkies know, the government could soon shut down again if Congress and the White House cannot agree to another spending plan early next year. The agreement signed by President Obama early Thursday morning will only fund operations through Jan. 15.

The deal also suspended enforcement of the debt limit until Feb. 7, which means another confrontation over the nation’s borrowing could occur again sometime in March.

S&P said in a statement Wednesday that the threat of new debt-ceiling and shutdown standoffs early next year could “weigh on consumer confidence, especially among government workers that were furloughed.”

“If people are afraid that the government policy brinksmanship will resurface again, and with the risk of another shutdown or worse, they’ll remain afraid to open up their checkbooks,” the agency said. “That points to another Humbug holiday season.”

S&P estimated that a default could force the government to reduce spending by 4 percent of annualized GDP, which would “put the economy in a recession and wipe out much of the economic progress made by the recovery from the Great Recession.”

To connect with Josh Hicks, follow his Twitter feed or e-mail  josh.hicks@washpost.comFor more federal news, visit The Federal Eye, The Fed Page and Post Politics. E-mail with news tips and other suggestions.

Josh Hicks covers Maryland politics and government. He previously anchored the Post’s Federal Eye blog, focusing on federal accountability and workforce issues.



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Josh Hicks · October 17, 2013

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