The U.S. economy will likely never recover $3 billion lost during the five-week partial government shutdown, according to a report released by the Congressional Budget Office on Monday.
The 35-day shutdown ― the longest such closure in U.S. history ― reportedly reduced GDP in the fourth quarter of 2018 by $3 billion and an additional estimated $8 billion in the first quarter of 2019 in relation to what it would have been otherwise.
A substantial portion of GDP lost during the budget impasse is expected to be recovered, but roughly $3 billion will be lost forever, the CBO estimated.
Over 800,000 federal employees were furloughed or, if deemed essential, continued to work without pay during the shutdown. It’s estimated that hundreds of thousands if not millions of government-contracted workers were also affected. Though federal employees are expected to receive back pay, contracted employees likely will not.
“Underlying those effects on the overall economy are much more significant effects on individual businesses and workers,” the CBO report stated. “Among those who experienced the largest and most direct negative effects are federal workers who faced delayed compensation and private-sector entities that lost business. Some of those private-sector entities will never recoup that lost income.”
. @speakerPelosi on CBO report: "The President's shutdown inflicted needless pain … and stole billions of dollars from the economy. Workers' financial security, families' well-being and America's economic strength all were senselessly sacrificed because of Trump's callousness." https://t.co/vTTgiH3pm9
— Maggie Jordan (@MaggieJordanACN) January 28, 2019
Oh…. and speaking of waste of money..,..
The Trump administration’s $1.5 trillion tax cut package appeared to have no major impact on businesses’ capital investment or hiring plans, according to a survey released a year after the biggest overhaul of the tax code in more than 30 years.
The National Association of Business Economics’ quarterly business conditions poll, published on Monday, found that while some companies reported accelerating investments because of lower corporate taxes, 84 percent of respondents said they had not changed plans. That compares to 81 percent in the previous survey published in October.
The White House had predicted that the massive fiscal stimulus package, marked by the reduction in the corporate tax rate to 21 percent from 35 percent, would boost business spending and job growth. The tax cuts came into effect in January 2018.
“A large majority of respondents, 84 percent, indicate that one year after its passage, the corporate tax reform has not caused their firms to change hiring or investment plans,” said NABE President Kevin Swift.
The lower tax rates, however, had an impact in the goods producing sector, with 50 percent of respondents from that sector reporting increased investments at their companies, and 20 percent saying they redirected hiring and investments to the United States from abroad.