National Economic Council Director Kevin Hassett warned Monday that the government shutdown could cost the U.S. economy approximately $15 billion a week.
In an interview on CNBC’s “Squawk Box,” Hassett cited an internal White House report suggesting the shutdown could have serious economic consequences if it continues for too long.
“My friends over at the Council of Economic Advisers gave me a report at the end of the week that said that it costs the U.S. GDP [gross domestic product] about $15 billion a week for a shutdown, or about a tenth of a percent of GDP,” Hassett said Monday.
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“And so if the shutdown continues for a long time, then there are going to be a lot of things that don’t happen, and it will show up in the GDP number,” he continued.
The White House memo, obtained by Politico, also showed a monthlong shutdown would lead to an additional 43,000 unemployed people, not accounting for the 1.9 million federal civilian employees who are working without pay or are furloughed, the news outlet reported.
The memo suggested a monthlong shutdown would also reduce consumer spending by $30 billion, both from direct impacts to federal employees and from spillover to other sectors, Politico reported.
An estimate from EY-Parthenon predicted the government shutdown would reduce GDP growth by $7 billion each week, or 0.1 percentage points in the fourth quarter. The hit to GDP reflects the reduced pay for furloughed federal workers, delayed government procurement of goods and services, and the resulting decline in final demand, according to the analysis.
The Congressional Budget Office (CBO) estimated the last shutdown, during President Trump’s first term, reduced economic output by $11 billion during the following two quarters, including $3 billion the U.S. economy never gained back.
The CBO has more recently estimated that approximately 750,000 employees could be furloughed each day of a shutdown. Their total compensation would cost the U.S. economy roughly $400 million each day they are out of work.
But Hassett largely brushed off the prospective long-term consequences of a government shutdown, saying, “the good news is the economy is booming,” touting the GDP and increase in retail sales year-over-year.
“There’s a lot of good news out there, and I think the government shutdown, in the end, is just going to be a footnote in history,” Hassett said. “But the Democrats need to come to the table, get the government open, and then if they want to negotiate over something, they can.”