Government Shutdown Pushing US Into Economic Contraction, According To Trump’s Economists


Donald Trump’s own economists have doubled their projections of the amount of economic growth being lost as a result of the ongoing government shutdown. Their new analysis shows that the shutdown is starting to have a big impact on the American economy.

New estimates from the White House’s Council of Economic Advisers show that the shutdown, which is now the longest in American history and is into its fourth week, has already slowed growth down. They also suggest that if it continues for much longer, it could even lead the U.S. economy to start contracting, according to the New York Times.

However, the Council of Economic Advisers still appears to be in little doubt about where the blame for the shutdown lies. Its chairman, Kevin Hassett, pointed the finger squarely at Congressional Democrats yesterday, saying “Congress needs to look at the harms that we’re talking about and address them.”

The council figures estimate that the shutdown is currently reducing economic growth by 0.13 percentage points each week it lasts. If those figures are correct, it means that the shutdown will have already cost the U.S. economy around 0.5 percent growth over the four weeks it has lasted so far.

These losses are a cumulative effect of lost work from contractors and furloughed federal staff who are still not getting paid and so are spending less as a result. He also highlighted the case of one of his own staff members who has been forced to start driving an Uber in order to make ends meet.

There are around 800,000 federal workers who are currently furloughed or continuing to work without pay. But in addition to this, there are also many thousands more government contractors who are losing out on work, too.

Sources close to the White House believe that President Trump will grow increasingly concerned about the economic impact of the shutdown in the coming days, and some believe it could result in him being more open to negotiating a settlement. However, others have argued that Trump is in a strong position and has leverage and so are advising him to stick to his demands.

Hassett did suggest that once the shutdown ends, much of the economic damage it has caused should be reversed, as workers will expect to receive back pay. But the more longterm effects could be felt by businesses if the markets worry that President Trump and the Democrat-controlled Congress could clash again, leading to a repeat of the shutdown in the future.

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