You may have heard the early estimate putting the cost of the shutdown at $24 billion. Time’s Swampland has the number, in Here’s How Much The Government Shutdown Cost The Economy. That was an early and very low estimate. It included,
- 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
But Wait, There’s More
A more recent estimate by the Council of Economic Advisers says 120,000 jobs were lost permanently by Oct 12 (they are still counting).
The Council of Economic Advisers just released an interesting paper examining the macroeconomic harm from the government shutdown and debt limit brinksmanship. To do so, they created a Weekly Economic Index from data that are released either daily or weekly (and weren’t delayed by the shutdown). These data include measures of consumer sentiment, unemployment claims, retail sales, steel production, and mortgage purchase applications.
The headline result: They estimate that the budget showdown cost about 120,000 jobs by October 12.
Confidence Plunged In October — Indicating That It Could Be Much Worse
But those were just early estimates. They did not look at the wider and lasting damage the shutdown and threat of default caused. Here is an indicator that the cost might have been — and will be — much worse, and continuing. Consumer confidence plunged in October. This from Marketwatch, appropriately headlined, Consumer confidence plunges in October,
Confidence among American consumers plunged in October to the lowest level in six months, as their expectations plummeted, the Conference Board reported Tuesday. The consumer-confidence index fell to 71.2 in October from a revised 80.2 in September. Economists polled by MarketWatch had projected the index to drop to 75 from a prior estimate of 79.7 in September. “Consumer confidence deteriorated considerably as the federal government shutdown and debt-ceiling crisis took a particularly large toll on consumers’ expectations,” said Lynn Franco, director of economic indicators at The Conference Board.
Consumer confidence is houses and cars purchased, it reflects how company managers might feel about deciding to hire. It reflects decisions to take a chance.
Seriously, how much confidence do you have that Republicans are going to ease up, stop obstructing everything in the Congress with their Hastert Rule in the House and their filibusters in the Senate? Would you seriously make a big financial decision when every effort to revive the economy is blocked, every dollar that should go to hire people to repair the infrastructure is blocked as “government spending” that might cause taxes to go up a bit on the wealthy?
So this plunge in confidence is a very bad sign that the costs to our economy resulting from the shutdown could be a lot greater than anyone thought.
In a few short weeks the Republicans might just try to do it all over again. They understand that their voters blame President Obama and the Democrats as the economy gets worse. Go look at Drudge Report on any given day, trumpeting every sign that the economy is faltering. Listen to Limbaugh, watch FOX. Their voters actually believe that this is the fault of President Obama, Democrats and “government spending.” Their propaganda is effective, and it is leading the country toward real trouble.