WASHINGTON -- The government shutdown has taken at least $24 billion out of the United States economy, the financial ratings agency Standard & Poor's said Wednesday.
The firm said the shutdown caused it to cut its forecast of gross domestic product growth in the fourth quarter by at least 0.6 percentage point. The agency lowered its estimate for GDP growth to close to 2 percent from 3 percent.
The estimate represents a staggering cost to the economy of a completely self-inflicted political catastrophe. Unlike the 2008 economic crisis and other past recessions, the government shutdown had nothing to do with larger economic trends. The numbers show Washington's brinksmanship caused real damage beyond furloughed government workers and the Washington, D.C., region.
The shutdown came after the Federal Reserve reported modest growth in the economy in September. "Reports from the 12 Federal Reserve districts suggest that national economic activity continued to expand at a modest to moderate pace during the reporting period of September through early October," the Federal Reserve wrote Wednesday.
Senate leaders reached a deal Wednesday to end the shutdown and fund the government until Jan. 15. The debt ceiling will be raised until Feb. 7. Senators from both parties hailed the agreement, despite the fact that it is temporary.
Standard & Poor's warned that even a temporary agreement could have consequences for the United States economy, leading consumers to worry about a sequel to the current crisis. "The short turnaround for politicians to negotiate some sort of lasting deal will likely weigh on consumer confidence, especially among government workers that were furloughed," the agency said. "If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they'll remain afraid to open up their checkbooks."
Indeed, many furloughed government workers were anxious, as they waited for Congress to act. "I’m looking at this and going, ‘Oh shit,’" said Nick Wolfe of Arlington, Va. “I literally had no money. If I didn’t get some money in my checking account, I can’t pay the rent in November.”
Jason Cherkis contributed reporting.
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