NYT: The Trump Shutdown is “Inflicting Far Greater Damage” on the Economy

The economic damage from the Trump shutdown is “inflicting far greater damage” than previously estimated, according to the President’s own economists. The New York Times explains the Council of Economic Advisers’ analysis shows how a prolonged shutdown could cause a recession. So, the President is not only making Americans less safe, but he’s also damaging our economy by refusing to reopen government while border negotiations continue. Key excerpts here:
The partial government shutdown is inflicting far greater damage on the United States economy than previously estimated, the White House acknowledged on Tuesday, as President Trump’s economists doubled projections of how much economic growth is being lost each week the standoff with Democrats continues.”
“The revised estimates from the Council of Economic Advisers show that the shutdown, now in its fourth week, is beginning to have real economic consequences. The analysis, and other projections from outside the White House, suggests that the shutdown has already weighed significantly on growth and could ultimately push the United States economy into a contraction.”
“While Vice President Mike Pence previously played down the shutdown’s effects amid a ‘roaring’ economy, White House officials are now cautioning Mr. Trump about the toll it could take on a sustained economic expansion.”
“[Kevin Hassett, the chairman of the Council of Economic Advisers,] said it was possible that the damage could grow. He also said much of the damage should be repaired once the shutdown ends and workers get back pay. But he acknowledged that the shutdown could permanently reduce growth expectations if businesses and markets begin to expect that Congress and the president will repeat the experience again and again.”
“Some economists have begun to warn that such a situation is likely and that economic confidence could be undermined as businesses, consumers and investors lose faith in the ability of political leaders to find agreement on issues like raising the federal debt limit and approving trade deals.”
That lack of confidence could snowball into a self-inflicted economic contraction on the heels of what appears to have been the nation’s strongest year of growth since the 2008 financial crisis. Financial markets are already highly volatile amid concerns about the trade fight with China, slowing global growth and signs of weakness in American housing and manufacturing sectors.”
“‘The economy could easily stall in the first quarter, and then the question is what happens in the second’ if the shutdown persists, said Ian Shepherdson, the chief economist at Pantheon Macroeconomics. ‘The longer it goes on, the longer it takes to recover.’”
“If the shutdown continues through the end of March, Mr. Shepherdson said in a research note, he would expect the economy to shrink in the first quarter. While federal workers are likely to receive back pay once the furlough ends, most government contractors will not, and the longer spending is depressed, the higher the risk that the businesses they run or patronize will fail, Mr. Shepherdson said.”