The cost of the US government shutdown

The cost of the US government shutdown (bryan mills on flickr)

The “shutdown will have a very real economic impact on real people, right away” – Barack Obama.

Today the US government faced shut down after the two houses of Congress failed to agree a new budget. 700,000 plus fed employees face unpaid leave.

So what is the cost of the shutdown?

  • Goldman Sachs estimates that a 3 week shutdown could cut 0.9% off US GDP this quarter
  • Research firm IHS has estimated the cost for the US government at $300 million per day of the shut down
  • Tourism revenues are expected to take a hit with national parks and attractions such as the Statue of Liberty closed

U.S. stocks fluctuated, after the Standard & Poor’s 500 Index fell to a three-week low, as investors weighed the economic effects of the shutdown. The S&P 500 rose 0.4 percent to 1,689.46 at 10:21 a.m. in New York. The yield on the 10-year Treasury note increased 2 basis points, or 0.02 percentage point, to 2.63 percent.

The government shutdown could cost the federal government well over $2 billion dollars if it resembles the last shutdowns in 1995-1996.

Further to this, consumer and business confidence could be shaken more broadly, as household spending accounts for 20 percent of the economy.

What do you think will be the real cost of the shutdown? Will investments be knocked? Let me know your thoughts.

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