The 35-day partial government shutdown over President Trump’s demands for $5.7 billion for a border wall cost the economy $11 billion, according to a report released Monday by the nonpartisan Congressional Budget Office.
The economy lost $11 billion during the shutdown, which began Dec. 22, but about $8 billion of that will be recouped as the government reopens and workers receive back pay.
The amount reflects lost output from federal employees, delayed government spending and reduced demand.
“Although most of the real GDP lost during the fourth quarter of 2018 and the first quarter of 2019 will eventually be recovered, CBO estimates that about $3 billion will not be,” CBO director Keith Hall said in a statement.
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.
The $8 billion, meanwhile, represents 0.2 percent of GDP during the first quarter of this year.
“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,” the report says.
“Some of those private-sector entities will never recoup that lost income,” it added.
The CBO’s analysis does not include some indirect effects of the shutdown, such as the halt in some federal permits and reduced access to loans.
But it suggests that businesses were beginning to postpone investments and hirings as a result of the shutdown and warned that the risks were becoming “increasingly significant” as the impasse continued, according to CNBC.
The report also looked at the effects of the administration’s trade policies on the economy.
It estimates that new tariffs on imports and exports will cut an average of 0.1 percent from economic growth through 2029. It also forecast customs duties will increase from 0.2 percent of GDP last year to 0.3 percent of GDP in 2019.
The report said the US budget deficit is set to hit $897 billion this year and predicts that economic growth will slow as the effects of Trump’s tax cut on business investment begin to fade.
The CBO forecasts that economic growth will slow this year to 2.3 percent, compared to the 3.1 percent rate in 2018.
Through 2023, according to the CBO, growth is expected to average 1.7 percent, below the office’s estimate of the economy’s potential.
The president retreated Friday from his demand for funding for a US-Mexico border wall that had caused the closure of about a quarter of the government.
He also threatened to resume the shutdown on Feb. 15 if he does not get what he wants.
