If the government does shutdown, around 800,000 workers will not be allowed to show up at their job. That means that the U.S. economy would lose about $1 billion a week in pay. Economists say that additional damage would come from businesses would have to scale back or completely stop operations. Employees of those companies then would spend less, continuing the vicious cycle.
Brian Kessler, an economist with Moody’s Analytics, says that a shutdown that lasts three or four weeks could mean a $55 billion loss for the economy. “What’s maddening is this is all totally voluntary. It’s totally unnecessary,” said Kessler.
Kessler added that there could still be hope for only a short shutdown. “If it’s a relatively short shutdown, it’s a minor headache,” he said. “But if it lasts several weeks, the people affected start to act like they’re unemployed. They delay larger purchases. That’s why you start to see a significantly greater effect the longer it goes.”
The damage will be widespread though, as small businesses, tourism and transportation will be hindered. In addition, a shutdown would draw attention to whether the debt ceiling will be raised to accommodate the nation’s bills. “A protracted shutdown would cause larger, escalating disruptions, including declines in private production and rising risk premiums in financial markets,” said a note from Macroeconomic Advisors. “However, we see the possibility of hitting the debt ceiling later this fall as a far larger threat to the economic outlook.”
