Thursday, January 10, 2019

Shutdown’s Economic Damage: $1 Billion a Week

The current federal government shutdown derives from one thing only: Donald Trump's desperate desire to have a "win" to keep his racist, religiously extreme, white supremacist base loyal.  Nothing else really matters in Trump world - including the damage being done to federal workers and their families or the larger U.S. economy.  A majority f Americans recognize this reality and the question becomes one of when Mitch McConnell ceases his political fellatio of Trump and yields to demands of the American public and Republicans who are coming under growing pressure from angry constituents.  A piece in Politico looks at the growing economic cost of Trump's temper tantrum.  Here are excerpts:
As federal workers face the prospect of missed paychecks during the partial government shutdown, their financial reality is rippling into the broader economy.
The roughly 800,000 government employees who are either furloughed or working without pay will be forced to start slashing their consumer spending when paychecks don’t appear this week. Private-sector contractors and other workers tied to the government are already seeing damage from lost business.
And a hit to the nation’s financial standing is on the horizon with a warning from Fitch Ratings on Wednesday about downgrading the government’s credit rating if the shutdown persists.
Estimates from President Donald Trump’s chief economist peg the cost to the overall U.S. economy at about $1.2 billion for each week the shutdown persists.
The shutdown — now in its 19th day — could also cost the U.S. government more than a billion dollars in lost productivity for 350,000 workers who are forced to stay home.
The government will likely give back pay to furloughed workers in addition to those forced to perform their duties without pay during the partial shutdown. The Obama administration estimated that the payroll cost alone for the 16-day government shutdown in October 2013 cost $2.5 billion, not counting lost revenue from government entities like national parks that were unable to collect fees.
The shutdown comes at a time when the U.S. economic outlook was already highly uncertain.
Global growth is slowing, trade tensions are simmering, the effects of the Fed’s steady interest rate hikes are starting to take hold, and the manufacturing and housing sectors are showing some signs of weakness.
All those factors were already leading economists to predict slower growth in 2019 than last year, which still might fall short of Trump’s 3 percent goal.
The jobs number could be a lot weaker in January if the shutdown continues through next week, when the department conducts its payroll survey; most of the furloughed workers would be counted as unemployed.
Additionally, jobless claims of private contractors have probably already increased by as much as 15,000, according to Michael Feroli, chief U.S. economist at JPMorgan.
That all means monthly jobs could decline in January for the first time since 2010.

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