Here’s How Much The Government Shutdown Cost The Economy

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MICHAEL MATHES / AFP / Getty Images

Protesters hold placards urging the U.S. Congress to end the federal government shutdown on Oct. 9, 2013 on Capitol Hill in Washington, D.C.

$24 billion.

That’s according to an estimate from Standard & Poor’s. The financial services company said the shutdown, which ended with a deal late Wednesday night after 16 days, took $24 billion out of the U.S. economy, and reduced projected fourth-quarter GDP growth from 3 percent to 2.4 percent.

Here’s a breakdown of some of the economic cost by our calculations:

  • About $3.1 billion in lost government services, according to the research firm IHS
  • $152 million per day in lost travel spending, according to the U.S. Travel Association
  • $76 million per day lost because of National Parks being shut down, according to the National Park Service
  • $217 million per day in lost federal and contractor wages in the Washington D.C. metropolitan area alone

Hundreds of thousands of federal workers bore the economic brunt of the shutdown. But small businesses also suffered from frozen government contracts and stalled business loans. Tourism suffered from closed national parks, and military families had to cope without childcare and other services. Federal workers will receive back-pay under the deal, but contractors will probably not get their lost wages. The stall in cash-flow could affect spending during the holiday shopping season.

And with the deal only guaranteeing government funding through Jan. 15, the situation could grow worse. “The short turnaround for politicians to negotiate some sort of lasting deal will likely weigh on consumer confidence, especially among government workers that were furloughed,” Standard & Poor’s said.

[CNN Money]

79 comments
JayLoDolce
JayLoDolce

This was a REPUBLICAN shutdown, that cost this country money. They're "fight" to "save" Americans isn't working. On the contrary, it is destroying this country. Vote for anyone other than a REPUBLICAN (or Tea Partier - they can't even agree with their own people), this, and every November that there is an election. These people's ideals and agendas are not the same as yours and mine. Let's tell them, "enough is enough", and let's take our country back!

alslaughter
alslaughter

This shutdown was a great hardship for me, as I am a government contractor who DID NOT get back pay and neither did the rest of the furloughed contractors.  Living a a single Mom and going on unempoloyment, with a 1 week waiting period really goofed me up!  This month, November, I had to sign a "payment arrangement" with the apartment complex that I rent from.  Entering into that arrangement caused a $125 late payment charge that Rush Enterprises in WA state charged me.  This was according to the Fair Housing Act.  I feel that in the case of Washington DC not being able to come to an agreement, fees like this should not be charged.  That $125 late fee could have gone toward car insurance or anything else that we scrimp to pay. 

Babaloo
Babaloo

I am a tax practitioner. I am also going to suffer due to the government shutdown. They are going to open late AGAIN this year essentially cutting my business' season to 9-10 weeks, yet they do not extend the season's deadline for the same number of days as what caused the season to open late. Normally the IRS starts accepting efiled returns about January 10th. So they cut out about 3 weeks from my season thus pushing everyone to cram in before April 15th. I'm a sole proprietor and do not hire other preparers so it all falls on me. I am forced to basically "shut off" doing returns and/or force my clients into extensions which they don't like. This loses customers for me. It's not my fault, but people want it NOW!  Even if they get in earlier, I'm so backed up already because of the short time, I can't get them all done timely, and I will not rush and make mistakes on anyone's tax return. I would like the IRS to extend the season for as long as there are delays in opening efiling by the IRS. I'm not the only one this affects because some forms are also pushed into delays into March because of "computer glitches" and because the government was shut down.  The government is not helping people. It is hurting people and I mean THE ENTIRE government. I do not blame a party; I blame them ALL.

aipiping
aipiping

"About $3.1 billion in lost government services & $217 million per day in lost federal and contractor wages in the Washington D.C. metropolitan area alone"  Who's to say that those services or wages are needed?  Yes, that is money that did not go out, but given government's propensity for waste, can we be sure they are truly needed for the CONSTITUTIONAL functions of the federal government?

"$76 million per day lost because of National Parks being shut down, according to the National Park Service"  That one is on Obama.  He didn't have to have his people shutdown open air spaces, he chose to do it.

mary.waterton
mary.waterton

More statistics brought to you by the "experts" who state that:

Losing 200,000 jobs nationwide means that the unemployment rate is falling.

Because if you don't have a job, then you don't want a job ... and if you don't want a job, then you are "no longer part of the workforce". Thus you will not be counted.

thugdrummer
thugdrummer

Estimates indicated that some 800,000 civil servants were furloughed during the shutdown. What was never mentioned is all the contractors who were affected. Estimates for the number of people working directly on federal contracts range from 10.5 million to 15 million. Depending on the specific contract, these people's experiences during the shutdown ranged from nothing (they continued to work), forced telecommuting, loss of paid leave, loss of income, temporary layoff, or permanent downsizing. The contractors hurt the most were almost always the small businesses. Most contractor employees affected will not get any backpay or be able to recoup their leave. And a large portion of the commerce lost during the shutdown was lunches. Many restaurants were seriously impacted, and they will not see people coming in and buying extra lunches when they get there back pay.


GusFring1
GusFring1

I still don't get how, really, ANY money was "lost" in this whole situation. If anything, I'd think the nation gained from the reduced government spending that would have occurred during that time. "Lost" in this context is a term thrown around to further talking points. Truthfully, the only losses were to individual workers. The nation, on a whole, saw a reduction in outgoing costs.

JuliusHenry
JuliusHenry

Bad assumptions for the most part.

First, the impact on the economy. S&P calculates the $24 billion impact based on all the wages federal workers didn’t get, and thus didn’t spend, plus the side effects from that lack of commerce. But what S&P doesn’t take into account is that those federal workers will probably see an increase in their commerce once they get their back pay.

The furloughed workers are all likely to engage in about the same level of commerce as they would have had the shutdown never happened. The timing may have changed due to the furlough, but they still going to buy clothes, fuel and food and go out to the movies.

MarthaMcElligott
MarthaMcElligott

Voting has to be the one most important priority for 2014 and clean house for 2016....I don't think I could take a month like this one ever again, the saddest thing is I don't believe none of the people responsible for charging up and spending money that did not belong to them much care one way or the other....All I know is I am not forgetting nor am I forgiving and I am voting to help clean them out, they can take their overinflated ego's with them. 20 billion or $ 24.00 is all the same to them.

AsYouLike
AsYouLike

Virginians our Primary Election is 11/5/13.  Return to your normal polling place. Polls open at 6:00 a.m. and close at 7:00 p.m.  Don't wait until the last minute to find out you don't have what you need to vote.  If you have any questions:

State Board of Elections

1100 Bank Street

Richmond, Virginia 23219

(804) 864-8902

(800) 552-9745


Let's give the GOP a premonition of 2014.  Let them hear our voices....VOTE, VOTE, VOTE!

JohnEdge
JohnEdge

What were the figures of oh let's say the 16 days before the shutdown and the 16 days during the shutdown? Give me the line items for both liberal media. Thanks YOur boss the taxpayer.

MartyJohnson
MartyJohnson

Are people REALLY stupid enough to believe those numbers? One obvious point, all those worthless scum who work for the federal government will get their back pay. And another almost as obvious: people on vacation did not suddenly stop spending merely because Obumbler put up Barrycades. They just spent their vacation dollars elsewhere.

JohnBlack
JohnBlack

Thanks for not standing your ground Republicans... I knew I could count on you.

TadH
TadH

AND, because of the shut down, the government spent about $30 billion less than it normally does (20% reduction in normal expenditures), thus theoretically requiring less taxes. That is a $6 billion net gain to the overall economy because of the shutdown.

This gain will, of course, evaporate because the bloated government will just speed up spending again. My vote would have been to raise the debt ceiling to cover our already incurred debt (i.e. pay our bills), but keep the government shut down to control continued non-essential spending and reduce the growth of the national debt. Keep in mind, even during the shutdown, critical services continued and the states were begining to pick up the slack in some areas.

CarolMorgan
CarolMorgan

Wow, and all for Ted Cruz' narcissistic little joy ride...it's really expensive to be him.

DebraKaim
DebraKaim

Sorry all, but it's deeper than just throwing a tantrum...this was an evilly, criminally thought out...coup attempt...and we can thank (insert your higher power here) that they failed!!!  I continue to be amazed at the people (many in my own family) who mindlessly follow these crooks...and make NO MISTAKE...that's what they are....there were 144 CROOKS who thought it would be better to destroy the US and much of the world economy as well...all for (drum roll please)....power and privatization! These people (I use that term loosely) don't care about this country, other than what can be GAINED from it!!  They could care less about anyone else's life!!!  When asked what the House gained from this, Ted Cruz replied "I got 2 million email addresses"....all from some of the most easily manipulated, racist, NON christians in the country.  Who don't even get that "their people" are scamming them!!!!  Please understand that the majority of the red, southern states, who've been screaming about wanting their country back, wanting the black, unamerican man out of office are THE BIGGEST drain on our society.  The fact is that MOST of those states take in more in Federal $$, than they EVER contribute....but "KEEP THE GOV'T OUT OF MY LIFE".....SMH.....I vacillate between anger/fear/sadness, as to how this will all play out....but don't think for one minute that the impeachment of this FINE President isn't next on their list of horrors....that's been their main goal since 2008.  I just hope that the DOJ is seriously looking into sedition, extortion, terrorism laws and FINDS those that apply then USE THEM....they CANNOT continue to hold this country hostage for all their disgusting ends!!!!!

LizzAStagnitta
LizzAStagnitta

Fiscally responsible!!! After costing this country 24 billions dollars from their temper tantrum!?? HELL NO!!

ThomasSoraci
ThomasSoraci

Let's put a cap on term length for these guys. More fresh minds in office, less old guys afraid to give up power.

sregansmith
sregansmith

It's not a question of how much the shutdown cost.  It's a question of how much more are we going into debt by what they did to avert the shutdown.

DavidKWilson
DavidKWilson

I dont get this.  Why is it bad that travel expenses were not paid out.      Maybe i am wrong but i thought the parks were a negative operation ( expenses exceed revenues)  How do these things translate into a cost?  Very misleading wording going on!  Go ahead educate me please.   


DillonMohler
DillonMohler

@mary.waterton "if you don't have a job you don't want a job" There is much in America you need to learn and see friend.

KevinPIvey
KevinPIvey

@JuliusHenry that's not the point if you are a politician who wants to blame the other party now is it? Curious as to why there is no mention of the Prez and his minions who came out and talked down the economy several times in their feeble attempt to instill fear in Americans....just as he/they did w the Sequester. Sad

DillonMohler
DillonMohler

@MarthaMcElligott The problem with voting is anybody that makes it far in politics has been bought by the corporations that "Donate" thousands and millions of dollars to "fund their campaigns" many of them don't work for you or me they work for the people that pay them more.

mjshep
mjshep

@JohnEdge  I'm sure the figures are out there on government websites, as it is all public information.  If you are so curious, look it up yourself, or does your mommy have to show you how?

mjshep
mjshep

@MartyJohnson Those "worthless scum" are what keeps this country running.  Maybe you would prefer that the country didn't keep running. Maybe you would prefer if nobody inspected your food to make sure it won't make you sick.  Maybe you would prefer that nobody ran the National Parks. Maybe you would prefer that nobody kept track of commodity prices and crop yields so that the agricultural markets and boards of trade can function. Maybe you would prefer that nobody developed new medicines or kept track of infectious diseases.  Maybe you would prefer that military procurement ground to a halt. Maybe you would prefer that no one inspected aircraft for safety.   If so, why do you hate America?

bbayliss50
bbayliss50

@MartyJohnson  

So, let's see if I have this right: The house votes forty times to repeal the ACA knowing that it won't pass the senate and if it did the President would veto. They then threaten economic disaster if it's not defunded, then delayed, then medical device tax stripped out, then they "have to get something, but don't know what". All this spearheaded by a freshman Senator, fund raising for 2016, leading a rebellion against his own party comprised of one faction of one half of one third of government. The President tells them to go pound sand.

And HE'S the "bumbler"?

 

dectra
dectra

@JohnBlack  

Yes John Black, THANK YOU for realizing you and the republicans are doing the Devils Work.....let's kill the American Economy, teabaggers! 

GOP: Party Before Country

mjshep
mjshep

@TadH There is an old maxim attributed to various people, including Mark Twain.  It goes like this; "It is better to keep your mouth shut and be thought a fool, than to open it and remove all doubt."

This is advice you should take to heart.



dectra
dectra

@TadH 

No, Tad...basic economics aren't your strong suit.

LOOSING money is not the same as not 'spending' money. 

I hope for the love of GOD someone else is watching over your portfolio....if you equate losses as equal to not spending, you are headed straight for the poor house.

bbayliss50
bbayliss50

@CarolMorgan Except he didn't pay for it. 

We did, to the tune of just under $100.00 for every man woman and child in the USA.

cchamp
cchamp

@DebraKaim What about TREASON!!!!  This has got to fall under that category.......  there must be something that can be done to these 'BAGGERS'........  THEY are the scourge of the earth!!!  We COULD DEPORT CRUZ back the Canada!!!!!!  Good thing he can never run for POTUS!!!


bbayliss50
bbayliss50

@ThomasSoraci  

Apparently you missed the fact that that this monumental screw up was the direct result of "fresh minds in office."

We have term limits, they're called elections.

bbayliss50
bbayliss50

@sregansmith  

First of all the shut down was not averted.

I'm guessing that  what you refer to is the debt ceiling. It's obvious that you don't understand it.

In terms you might understand, The budget is like the amount you spend with your credit card, the debt ceiling is like the invoice you receive at the end of the month. Get it?

SuziGaines
SuziGaines

@DavidKWilsonThe 152 million lost per day in travel expenses is likely the estimate of all the travel people couldn't take due to the shutdown.  Travel is a huge industry and supports something like 450,000 people.  For just one example of the trickle down affects caused by the shutdown take a look at the Grand Canyon rafting community, 2-3 groups of 16 people were supposed to have launched on 3 week long rafting trips down the canyon but couldn't because of the shutdown.  So they didn't pay the shuttle drivers who earn a living shuttling people's cars from Lee's Ferry to Pearce Ferry, they cancelled thousands of dollars worth of orders to local businesses who pack food coolers and the businesses who rent equipment.  They didn't stay in the hotels nearby while they traveled to the canyon, and they didn't buy gas, food, trinkets from local venders.  Multiply that by thousands of similar examples of money not spent on travel throughout the nation.

Educated1
Educated1

The metrics are economic cost, which captures the net effect on the entire economy not just how much it directly costs the government.  It's encompasses much more.

For example, the only (significant) impact the national parks being closed on the government is the cost of wages.  In terms of the economy (or economic cost), it is huge especially in towns near tourist heavy parks.  With the park closed, the cost to the economy is the cost of people not traveling, cost of empty hotels/motels/campsites, loss of restaraunt revenue, no tours, no souveniers bought, park employees not spending their wages, etc. 

vetgpeck
vetgpeck

@mjshep @TadH the quote's original AUTHOR stated this in Proverbs...a good book for all of us to consider no matter the date, the deficit, the economy...

dectra
dectra

@cchamp

Give it a rest, stop throwing a temper tantrum and yelling 'treason' 

Be the more civil party.

theironmisfit
theironmisfit

@bbayliss50 @sregansmith 

OMG, you really don't know what you're talking about. You are completely wrong.

The budget is the amount of money you want to spend every month, say $3,700

The Debt Ceiling is the credit limit of your credit card.

If you only earn $3,000 per month from your job, so you have to 'borrow' the extra $700 from your credit card every month.

Eventually you hit your credit limit. Asking for a debt ceiling increase is like calling Chase and demanding a credit extension so you can, "pay your bills".

BTW... slap a few more 0's on those numbers and you have the US 2014 budget. Look it up.

theironmisfit
theironmisfit

@SuziGaines @DavidKWilson  The money not spent does not evaporate from the economy as a whole, it is likely spent in a different locality, on different things or just delayed and the net effect is close to 0. It is true there is some loss (non-refundable tickets, deposits, etc.) but this is usually a fraction of the overall spending.

Your analysis is flawed and oversimplified in focusing on local impacts while ignoring the reality that money not spent in one place is often redirected to a different place or a different thing. This is the basis of a consumption driven economy.

For example, the money not earned by the shuttle drivers might have made it's way to the vacationers local mall instead.


theironmisfit
theironmisfit

@Educated1 Actually your analysis is flawed. 

Your assumption is that the money not spent by people on "travel/hotels/etc" just evaporates from the economy. Not true. It is redirected to other segments of the economy or possibly to personal savings and/or investment. A family not taking a trip may purchase a new washing machine or buy a new car earlier than they otherwise could. The family may opt instead to travel to Disney World or take a less expensive "staycation" and spend the money on local attractions and businesses. They might also instead choose to save the money in an education fund for their children and benefit from longer term financial stability. Overall the money is likely spent somewhere, thus benefiting the economy as a whole.

In the end the net effect across the entire economy is likely even; the local park impact is higher but offset by spending/saving in a different locality. The only real loss is in not seeing the park.


byst1nder
byst1nder

@theironmisfit @dectra Yes. And let us try to repeal it forty times, knowing that it will not pass in the Democrat held Senate or the President's office. 

 Let us waste taxpayer's money! That's what the Congress is good for.

bbayliss50
bbayliss50

@theironmisfit @dectraThe bill has been passed. It is now law. Anyone who voted on the bill without having their staff read and understand it should resign because that's their JOB.

The argument that the law is illegitimate because it was "too long" or "too hard to read" is specious.

jrlh
jrlh

@mjshep You could print all the money you wanted to pay your credit card....It would not be enough to devalue  the dollar...When government does, your wages get worth less...Your money is worth half of what is was in '93, have your wages doubled?  

You do not seem to understand, the government already has to keep interest artificially low (which has already impacted or economy, with the bubbles we have experienced) to be able to service the debt we have now....It is the third largest expenditure we have, take interest to 10% and see what happens.

It is a waste of time to explain it to you because until you live it you won't know what I am saying is true.

Discipulus
Discipulus

@theironmisfit @bbayliss50 @sregansmith  A national economy does NOT function like a household budget. Besides, the debt ceiling concept was begun after WWI and became antiquated by the 1970s. See Matt Taibbi, "The Mad Science of the National Debt,"  He makes a good case for understanding the major differences between the debt ceiling and the national dept and how the American public is being played by the GOP who are deliberately trying to confuse one with the other in order to engender mass appeal. They'll resort to anything to stay in power, including deliberate deception.

mjshep
mjshep

@theironmisfit @bbayliss50 @sregansmith Ummm, let's see.... No, it's not.  The financial situation of the Federal Government is in no way analogous  to the finances of a family.  It's just not.  The national debt is not like the limit on a credit card. It's just not.  What if a credit card company came to me and said we need a payment, and I said ,"Wait a minute, I'll go down to the basement and just print some money, is that OK?" And the credit card company had to say "Fine", because I get to print ALL the money anyway. 

Get it?

In any case, the debt is not a drag on the economy, and unless the debt service is unsustainable or exceedingly large, which it is nowhere near being, it actually fuels it.  But I wouldn't expect you to understand that.

mjshep
mjshep

@AndrewBennett Don't worry, Andrew, some folks are just not meant to understand economics, I guess. Ironmisfit is a good example of that.

AndrewBennett
AndrewBennett

@theironmisfit @SuziGaines @DavidKWilson I'd say YOUR analysis is flawed. You're going around railing on people for making "assumptions" but your "analysis" that all the money is going to be spent elsewhere and that there is a net effect of roughly zero isn't based on anything other than your puzzling assumptions on what people are going to do with their money.

Not to mention that you are completely ignoring the fact that many businesses and even entire communities such as the one Suzi mentions DEPEND on income from those tourists visiting National Parks & the like. Your imaginary local mall isn't going to take that big of a hit if that family goes rafting instead of coming to their business. The same isn't true the other way around.