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Commentary
Wall Street Journal

The Shutdown Won’t Stop Growth

It’s painful for federal employees but has little effect on GDP

harold_furchtgott_roth
harold_furchtgott_roth
Senior Fellow and Director, Center for the Economics of the Internet
 President Donald Trump debates with then House Minority Leader Nancy Pelosi Senate Minority Leader Chuck Schumer as Vice President Mike Pence listens during a meeting on Tuesday, Dec. 11, 2018 in Washington, DC. (Jabin Botsford/Getty Images)
Caption
President Donald Trump debates with then House Minority Leader Nancy Pelosi Senate Minority Leader Chuck Schumer as Vice President Mike Pence listens during a meeting on Tuesday, Dec. 11, 2018 in Washington, DC. (Jabin Botsford/Getty Images)

Does the U.S. government shutdown endanger economic growth? It has led to missed paychecks, a source of enormous pain and anxiety for furloughed employees and their families. Yet these employees represent approximately 0.5% of all American workers (although a much higher share in Washington and its suburbs). The effect of the furloughs on gross domestic product is likely small.

Nonetheless, some economic forecasters have reduced their estimates of first-quarter annualized economic growth by 0.2 to 0.4 percentage point due to the partial government shutdown. This would amount to a loss of GDP in the first quarter of 2019 of between $10 billion and $20 billion—substantially more than President Trump demands for the border wall.

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