Here we are in Day 2 of the government shutdown. The horror stories are slowly trickling out from closed war memorials to children with cancer. But one cost of the federal government shutting down has been hard to measure – the costs to the economy. Now a global market research firm has produced an estimate, the shutdown will cost the US economy approximately $300 million a day.
A partial shutdown of the federal government will cost the U.S. at least $300 million a day in lost economic output at the start, according to IHS Inc. accelerate if it continues as it depresses confidence and spending by businesses and consumers.
Lexington, Massachusetts-based IHS, a global market research firm, estimates that its forecast for 2.2 percent annualized growth in the fourth quarter will be reduced 0.2 percentage point in a weeklong shutdown.
Not something we need with historic poverty and stagnant incomes.
And beyond lost output is the toll the shutdown takes on consumer confidence. Who can really feel good about the economy when the federal government is unable to produce a working budget and may even default on its debt obligations?
“The longer the shutdown, the more damage will accrue to business and consumer confidence,” Eric Green, New York-based global head of foreign exchange, rates and commodities at TD Securities USA LLC, wrote in a note. “A longer shutdown stretching into mid-October, when the Treasury estimated that the debt ceiling will need to be raised, would likely magnify the hit to economic activity by raising the risk of a bad outcome on the debt ceiling.”
This may explain Corporate America’s jump to supporting President Obama over the Republicans. Big Business knows the truth about “free market” capitalism, it needs the government to survive. It’s all fun and games to wax philosophical about Ayn Rand but without government support the corporate sector is dead meat. And if the House GOP actually forces a default on the debt ceiling the 1% – the people who actually own financial assets – would be destroyed directly while the 99% would only be damaged by the ancillary consequences and might even come out the better for it pending on how the economy and financial system were rebuilt.
Koch Brothers call your office.
Photo by JamesAlan1986 under Creative Commons license.