U.S. government shutdown has trickle-down effect
A partial shutdown of the U.S. government due to gridlock in Congress over a short-term spending extension will cost the U.S. economy about $300 million per day, or $1.5 billion per week, but lost productivity could worsen if the political standoff in Washington drags out, IHS said.
The decline is small compared with a multi-trillion dollar economy, but exacerbates the drag to the economy from sequestration earlier this year.
The global market research firm said a week-long shutdown could trim 0.2 percent from its forecast of 2.2 percent growth in the fourth quarter, in line with what economists at last week's FTR Associates' conference
in Indianapolis opined.
An analyst interviewed by Bloomberg
said a three-week shutdown could knock down fourth-quarter GDP by 1 percent or more as furloughed federal workers stop spending at lunch counters, dry cleaners and other local businesses. Fourth-quarter growth could drop 0.5 percent if the government closure lasts three weeks, an IHS analyst said on American Public Media's "
The government is continuing services necessary for the safety of life and protection of property. That means, for example, that ports of entry will be open and U.S. Customs inspectors and related staff will continue cargo security and revenue collections. Inspectors will also process international passengers at airports, where air traffic controllers will also be on the job.
But federal employees who continue to work will not receive any paychecks until the budget battle in Washington is resolved.
Many other government services have been put on hold, including permits and reviews for transportation projects, and inspections by a host of agencies dealing with everything from chemical facilities and drinking water systems to meat processing. Many government Web sites are blanked out or are not being actively updated.
In a conference call with industry stakeholders on Tuesday, U.S. Customs and Border Protection officials said they will only furlough about 6,000 of the agency's 58,000 employees.
According to a summary of the call provided by the American Association of Exporters and Importers to its members, employees will still be on duty at the Centers for Excellence and Expertise, Global Entry interviews will be proceed as scheduled, C-TPAT validations will be fully staffed except for foreign validations as not travel is authorized and the customs broker examination scheduled for Oct. 7 will still take place.
Post-release functions are put on hold.
Other government agencies with border jurisdiction, such a the Food and Drug Administration and the Animal and Plant Health Inspection Service, will also be full staffed to clear goods.
The ACE program could suffer some temporary loss of personnel that slows down development, according to AAEI's readout of the call.
CBP officials said it is premature to know whether the shutdown will impact the Trade Symposium scheduled for Oct. 24 in Washington.
AAEI said that the Office of the U.S. Trade Representative sent an e-mail to industry groups stating it will be unable to carry out normal operations due to the shutdown. Officials are still planning to attend the upcoming meeting of the Trans-Pacific Partnership trade ministers as well as the APEC meetings in Bali, Indonesia beginning Oct. 3, as well as the second round of negotiations of the Transatlantic Trade and Investment Partnership Oct. 7-11 in Brussels, Belgium, but plans could change if the budget situation is not quickly resolved.