WASHINGTON: As a deadline to reach a deal over border—wall funding draws closer, economists have warned that a second government shutdown would hurt United States (US) economic growth, which was already undermined by a 35-day partial shutdown, Xinhua news agency reported, quoting a survey by The Wall Street Journal (WSJ).
According to the recent survey released Thursday, nearly 60 per cent of the private-sector economic forecasters said another shutdown would have “somewhat” of an impact on economic growth, while 16 per cent said the impact would be “significant”.
“A second shutdown would severely erode consumer and business confidence,” the WSJ quoted Thomas Kevin Swift, chief economist at the American Chemistry Council, as saying.
The record-long partial shutdown, which ended Jan 25, cost the US economy approximately US$11 billion, a report from the Congressional Budget Office (CBO) said last week.
The five-week shutdown reduced real gross domestic product (GDP) in the fourth quarter of 2018 by US$3 billion or 0.1 per cent, and could lower GDP in the first quarter of 2019 by US$8 billion or 0.2 per cent, the report said.
Despite an expected rebound in the subsequent quarters, the CBO estimated that about US$3 billion lost in real GDP won’t be recovered. That equals 0.02 per cent of the projected annual GDP in 2019.
President Donald Trump signed a bill two weeks ago to fund the government through Feb 15, leaving more time for the White House and Democrats to negotiate over border security, the impasse over which led to the longest-ever government shutdown.
When delivering his State of the Union address Tuesday night, Trump resumed his defence of his long-demanded US-Mexico border wall, saying that “I’ll get it built.”
The president said the border wall with Mexico will be “a smart, strategic, see-through steel barrier — not just a simple concrete wall”.
If the White House and the Democrats fail to reach an agreement to provide funding for the border wall before Feb 15, the government could be partially shut down again. – Bernama
