US Government Shutdown Knocks Billions Off US Economy


The shutdown of the Government of the United States of America that lasted for five weeks wiped approximately $8 billion (£6.08 billion) off the gross domestic product (GDP) of the country in the first quarter of the year.

The spending watchdog of the United States of America, the Congressional Budget Office (CBO), said that approximately $3 billion was also wiped off the GDP in the fourth quarter of the previous year because of the reduced economic activity during the shutdown, which was sparked by a dispute over the funding for the proposed $5.7 billion border wall of Donald Trump, the President of the United States of America.

Most of the GDP that was lost during the partial US government closure, which ran from the 22nd of December 2018 to the 25th of January this year, will be recovered, however, the CBO estimated that approximately $3 billion will not be recovered.

The level of GDP for the full calendar year is anticipated to be 0.02 percent smaller as compared to what would have been if the shutdown had not occurred.

The report stated: “In CBO’s estimation, the shutdown dampened economic activity mainly because of the loss of furloughed workers’ contribution to GDP, the delay in federal spending on goods and services, and the reduction in aggregate demand (which thereby dampened private-sector activity).”

Thousands of federal employees were ordered to go back to work without pay during the 35-day impasse over the funding of the border wall, which President Trump eventually was not able to secure.

The report disclosed further: “Underlying those effects on the overall economy are much more significant effects on individual businesses and workers.”

It added: “Among those who experienced the largest and most direct negative effects are federal workers who faced delayed compensation and private-sector entities that lost business. Some of those private-sector entities will never recoup that lost income.”