A Government Shutdown Could Cost the U.S. Economy $6 Billion a Week, According to EY's Chief Economist Experts from EY tell BIZ Experiences that a government shutdown could leave "a visible mark" on the economy.
By Erin Davis
A government shutdown is just hours away and lawmakers are scrambling to come up with a plan. If Congress doesn't agree on a measure, the shutdown goes into effect at 12:01 a.m. Saturday.
Each year, Congress must pass a spending bill to keep the government running. That's supposed to happen by Oct. 1. Now, after continuing resolutions, Friday is the new deadline. Two measures have failed already.
Experts from EY tell BIZ Experiences that a government shutdown could leave "a visible mark on the economy."
"We estimate that each week of a government shutdown will cost the U.S. economy $6 billion," says EY Chief Economist Gregory Daco.
What services would be affected by a government shutdown?
A government shutdown would put a stop to most government agency activities, including the IRS. Though TSA officers and active-duty military will have paychecks delayed, they will stay on duty, reports CBS.
National Parks and Smithsonian museums would close—just in time for the holidays.
How does a government shutdown impact the U.S. economy?
A very brief shutdown would have a "negligible impact" on the economy, though as time goes on it grows significantly.
On an annualized basis, a one-week furlough would cut $6 billion, or 0.1% off real GDP growth in Q4 (even though furloughed workers have always been paid retroactively), Daco says.
"The 35-day government shutdown in early 2019 led to rising policy uncertainty," he added.
What services are not affected by a government shutdown?
Air traffic controllers, food safety inspectors, armed services, and the U.S. Postal Service would not be affected. Those services have separate funding, as does The Fed.
How many government shutdowns have there been?
There have been 20 shutdowns, with the longest being 35 days between December 2018 and January 2019. At that time, 375,000 federal government employees were furloughed and another 425,000 workers were required to work without pay, per EY data.
