CBO says economy lost $11 billion during shutdown - CNN

CBO says economy lost $11 billion during shutdown

By Lydia DePillis, CNN Business

Updated 1752 GMT (0152 HKT) January 28, 2019

President Donald Trump announces a deal to reopen the government on Friday, January 25. He agreed to a temporary funding measure through February 15 that allows federal employees to return to work. The deal did not include the border wall funding that Trump had demanded.
Photos: The government shutdown, in photos
President Donald Trump announces a deal to reopen the government on Friday, January 25. He agreed to a temporary funding measure through February 15 that allows federal employees to return to work. The deal did not include the border wall funding that Trump had demanded.
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House Speaker Nancy Pelosi signs the deal to reopen the government on January 25. Democrats insisted throughout the shutdown that Trump should sign a measure to reopen the government before any border security negotiations could begin.
Photos: The government shutdown, in photos
House Speaker Nancy Pelosi signs the deal to reopen the government on January 25. Democrats insisted throughout the shutdown that Trump should sign a measure to reopen the government before any border security negotiations could begin.
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The air traffic control tower at New York's LaGuardia Airport on January 25. The Federal Aviation Administration reported delays in air travel because of a "slight increase in sick leave" at two East Coast air traffic control facilities.
Photos: The government shutdown, in photos
The air traffic control tower at New York's LaGuardia Airport on January 25. The Federal Aviation Administration reported delays in air travel because of a "slight increase in sick leave" at two East Coast air traffic control facilities.
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Furloughed government workers protest against the shutdown on Capitol Hill on Wednesday, January 23. As the shutdown dragged on, more federal employees were called back to work -- without pay -- to keep key things running smoothly.
Photos: The government shutdown, in photos
Furloughed government workers protest against the shutdown on Capitol Hill on Wednesday, January 23. As the shutdown dragged on, more federal employees were called back to work -- without pay -- to keep key things running smoothly.
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The Capitol at sunset on Thursday, January 24, after the Senate rejected Democratic and Republican proposals for ending the shutdown.
Photos: The government shutdown, in photos
The Capitol at sunset on Thursday, January 24, after the Senate rejected Democratic and Republican proposals for ending the shutdown.
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A furloughed worker displays a sign that reads "Reopen the Government" during a protest in Washington on January 23.
Photos: The government shutdown, in photos
A furloughed worker displays a sign that reads "Reopen the Government" during a protest in Washington on January 23.
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Furloughed government workers hold a silent protest on Capitol Hill on January 23.
Photos: The government shutdown, in photos
Furloughed government workers hold a silent protest on Capitol Hill on January 23.
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Vickie Martin, president of the American Federation of Government Workers Local 1438, reacts to the locked door of US Sen. Mitch McConnell's office in Lexington, Kentucky, during a January 23 protest.
Photos: The government shutdown, in photos
Vickie Martin, president of the American Federation of Government Workers Local 1438, reacts to the locked door of US Sen. Mitch McConnell's office in Lexington, Kentucky, during a January 23 protest.
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Chef Joshua Wiggins cuts portions of meatloaf for furloughed federal workers in Red Bank, New Jersey, on Monday, January 21. The free lunch was served at JBJ Soul Kitchen, the restaurant of rock star Jon Bon Jovi.
Photos: The government shutdown, in photos
Chef Joshua Wiggins cuts portions of meatloaf for furloughed federal workers in Red Bank, New Jersey, on Monday, January 21. The free lunch was served at JBJ Soul Kitchen, the restaurant of rock star Jon Bon Jovi.
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US Coast Guard families receive free groceries during a food giveaway in Novato, California, on Saturday, January 19. Thousands of active-duty Coast Guard members weren't getting paid during the shutdown. The Coast Guard is the only military branch under the Department of Homeland Security.
Photos: The government shutdown, in photos
US Coast Guard families receive free groceries during a food giveaway in Novato, California, on Saturday, January 19. Thousands of active-duty Coast Guard members weren't getting paid during the shutdown. The Coast Guard is the only military branch under the Department of Homeland Security.
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US President Donald Trump <a href="https://www.cnn.com/2019/01/19/politics/house-democrats-border-security-funding-trump/index.html" target="_blank">announces a proposal to end the shutdown </a>on Saturday, January 19. In exchange for $5.7 billion for wall funding, Trump offered temporary protection from deportations for some undocumented immigrants. Democrats swiftly rejected the proposal.
Photos: The government shutdown, in photos
US President Donald Trump announces a proposal to end the shutdown on Saturday, January 19. In exchange for $5.7 billion for wall funding, Trump offered temporary protection from deportations for some undocumented immigrants. Democrats swiftly rejected the proposal.
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Employees of Frontier Airlines bring donated food for federal workers to Orlando International Airport on Wednesday, January 16.
Photos: The government shutdown, in photos
Employees of Frontier Airlines bring donated food for federal workers to Orlando International Airport on Wednesday, January 16.
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A portion of a letter that House Speaker Nancy Pelosi sent to President Trump on January 16 asks him to <a href="https://www.cnn.com/2019/01/16/politics/nancy-pelosi-asks-trump-move-state-of-the-union-address/index.html" target="_blank">postpone his upcoming State of the Union address</a> until the government reopens.
Photos: The government shutdown, in photos
A portion of a letter that House Speaker Nancy Pelosi sent to President Trump on January 16 asks him to postpone his upcoming State of the Union address until the government reopens.
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Airport operation workers flip burgers and hot dogs at Salt Lake City International Airport on January 16. They treated federal workers to a free lunch.
Photos: The government shutdown, in photos
Airport operation workers flip burgers and hot dogs at Salt Lake City International Airport on January 16. They treated federal workers to a free lunch.
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US Rep. Jahana Hayes, D-Connecticut, holds a letter January 16 that was delivered to Senate Majority Leader Mitch McConnell's office, urging the Senate to act on House-passed legislation to reopen the government.
Photos: The government shutdown, in photos
US Rep. Jahana Hayes, D-Connecticut, holds a letter January 16 that was delivered to Senate Majority Leader Mitch McConnell's office, urging the Senate to act on House-passed legislation to reopen the government.
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Security lines at Atlanta's Hartsfield-Jackson International Airport back up Monday, January 14, causing some travelers to miss their flights. Officers with the Transportation Security Administration had been working without pay.
Photos: The government shutdown, in photos
Security lines at Atlanta's Hartsfield-Jackson International Airport back up Monday, January 14, causing some travelers to miss their flights. Officers with the Transportation Security Administration had been working without pay.
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Trump displays <a href="https://www.cnn.com/2019/01/14/politics/donald-trump-clemson-food/index.html" target="_blank">fast food </a>for Clemson University's football team to celebrate its national championship at the White House on January 14. The administration said Trump paid for the meal after much of the White House residence staff, including chefs, were furloughed.
Photos: The government shutdown, in photos
Trump displays fast food for Clemson University's football team to celebrate its national championship at the White House on January 14. The administration said Trump paid for the meal after much of the White House residence staff, including chefs, were furloughed.
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The White House looks especially wintry after a storm on Sunday, January 13.
Photos: The government shutdown, in photos
The White House looks especially wintry after a storm on Sunday, January 13.
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The Capitol amid the snowfall on January 13.
Photos: The government shutdown, in photos
The Capitol amid the snowfall on January 13.
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Job seekers fill out information during a TSA fast-track hiring event in Nashville on Saturday, January 12.
Photos: The government shutdown, in photos
Job seekers fill out information during a TSA fast-track hiring event in Nashville on Saturday, January 12.
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A traveler sleeps near a closed terminal at Miami International Airport on January 12.
Photos: The government shutdown, in photos
A traveler sleeps near a closed terminal at Miami International Airport on January 12.
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Pennsylvania Avenue in Washington appears empty from the observation deck of the Old Post Office Tower on Friday, January 11.
Photos: The government shutdown, in photos
Pennsylvania Avenue in Washington appears empty from the observation deck of the Old Post Office Tower on Friday, January 11.
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A child plays along the border wall in Tijuana, Mexico, on Friday, January 11.
Photos: The government shutdown, in photos
A child plays along the border wall in Tijuana, Mexico, on Friday, January 11.
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Federal workers and contractors rally against the government shutdown outside the AFL-CIO headquarters in Washington on Thursday, January 10.
Photos: The government shutdown, in photos
Federal workers and contractors rally against the government shutdown outside the AFL-CIO headquarters in Washington on Thursday, January 10.
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Trump is joined by US Sens. John Cornyn, left, and Ted Cruz as <a href="https://www.cnn.com/2019/01/10/politics/trump-southern-border-visit/index.html" target="_blank">he visits the US-Mexico border</a> near Mission, Texas, on Thursday, January 10. Trump, surrounded by border patrol agents, said: "We need security. We need the kind of backup they want."
Photos: The government shutdown, in photos
Trump is joined by US Sens. John Cornyn, left, and Ted Cruz as he visits the US-Mexico border near Mission, Texas, on Thursday, January 10. Trump, surrounded by border patrol agents, said: "We need security. We need the kind of backup they want."
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A protester holds a sign during a rally in Washington on January 10. Around 800,000 federal workers were out of work or were working without pay because of the shutdown.
Photos: The government shutdown, in photos
A protester holds a sign during a rally in Washington on January 10. Around 800,000 federal workers were out of work or were working without pay because of the shutdown.
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Katie Barron stands in her kitchen while working from home in Madison, Alabama, on Wednesday, January 9. Barron works for a private company not connected to the government, but her husband is a National Weather Service meteorologist who was forced to work without pay because his job is classified as essential.
Photos: The government shutdown, in photos
Katie Barron stands in her kitchen while working from home in Madison, Alabama, on Wednesday, January 9. Barron works for a private company not connected to the government, but her husband is a National Weather Service meteorologist who was forced to work without pay because his job is classified as essential.
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House Democratic Whip Steny Hoyer holds a quote from Senate Majority Leader Mitch McConnell as he speaks to the media on January 9.
Photos: The government shutdown, in photos
House Democratic Whip Steny Hoyer holds a quote from Senate Majority Leader Mitch McConnell as he speaks to the media on January 9.
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Tables sit empty during dinnertime at Rocket City Tavern, located near numerous federal agencies in Huntsville, Alabama, on January 9. Business at the restaurant had been down since the shutdown began.
Photos: The government shutdown, in photos
Tables sit empty during dinnertime at Rocket City Tavern, located near numerous federal agencies in Huntsville, Alabama, on January 9. Business at the restaurant had been down since the shutdown began.
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Federal Aviation Administration employee Michael Jessie, who was working without pay as an aviation safety inspector, holds a sign Tuesday, January 8, while attending a news conference at Newark Liberty International Airport in New Jersey.
Photos: The government shutdown, in photos
Federal Aviation Administration employee Michael Jessie, who was working without pay as an aviation safety inspector, holds a sign Tuesday, January 8, while attending a news conference at Newark Liberty International Airport in New Jersey.
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A tourist in Philadelphia takes a picture through a window of the closed building housing the Liberty Bell on January 8.
Photos: The government shutdown, in photos
A tourist in Philadelphia takes a picture through a window of the closed building housing the Liberty Bell on January 8.
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President Trump gives a prime-time address about border security on January 8. In his Oval Office address, Trump warned of "a growing humanitarian and security crisis at our southern border."
Photos: The government shutdown, in photos
President Trump gives a prime-time address about border security on January 8. In his Oval Office address, Trump warned of "a growing humanitarian and security crisis at our southern border."
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Migrants from Mexico and Central America watch Trump's speech from a shelter in Tijuana, Mexico, on January 8.
Photos: The government shutdown, in photos
Migrants from Mexico and Central America watch Trump's speech from a shelter in Tijuana, Mexico, on January 8.
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Senate Minority Leader Chuck Schumer and House Speaker Nancy Pelosi delivered a rebuttal after Trump's speech. "President Trump must stop holding the American people hostage, must stop manufacturing a crisis and must reopen the government," Pelosi said.
Photos: The government shutdown, in photos
Senate Minority Leader Chuck Schumer and House Speaker Nancy Pelosi delivered a rebuttal after Trump's speech. "President Trump must stop holding the American people hostage, must stop manufacturing a crisis and must reopen the government," Pelosi said.
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Passengers wait in line at New York's John F. Kennedy International Airport on Monday, January 7.
Photos: The government shutdown, in photos
Passengers wait in line at New York's John F. Kennedy International Airport on Monday, January 7.
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A National Park Service ranger looks out onto Washington from the Trump International Hotel's historic clock tower.
Photos: The government shutdown, in photos
A National Park Service ranger looks out onto Washington from the Trump International Hotel's historic clock tower.
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A pedestrian in Arlington, Virginia, climbs over a fence leading to Theodore Roosevelt Island, which was closed because of the government shutdown on Sunday, January 6.
Photos: The government shutdown, in photos
A pedestrian in Arlington, Virginia, climbs over a fence leading to Theodore Roosevelt Island, which was closed because of the government shutdown on Sunday, January 6.
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Visitors drive through Tennessee's Great Smoky Mountains National Park on Saturday, January 5.
Photos: The government shutdown, in photos
Visitors drive through Tennessee's Great Smoky Mountains National Park on Saturday, January 5.
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A donation box sits on the counter at the Ernest F. Coe Visitor Center in Florida's Everglades National Park. Dany Garcia, center, was being paid by the Florida National Parks Association to work in the center during the partial government shutdown.
Photos: The government shutdown, in photos
A donation box sits on the counter at the Ernest F. Coe Visitor Center in Florida's Everglades National Park. Dany Garcia, center, was being paid by the Florida National Parks Association to work in the center during the partial government shutdown.
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A woman and her child visit the tower deck at the National Gallery of Art in Washington on Wednesday, January 2. It was scheduled to close the next day because of the shutdown.
Photos: The government shutdown, in photos
A woman and her child visit the tower deck at the National Gallery of Art in Washington on Wednesday, January 2. It was scheduled to close the next day because of the shutdown.
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A closed sign is posted on the gate of Smithsonian's National Zoo on January 2.
Photos: The government shutdown, in photos
A closed sign is posted on the gate of Smithsonian's National Zoo on January 2.
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A child looks inside the National Museum of African American History, which was closed because of the shutdown.
Photos: The government shutdown, in photos
A child looks inside the National Museum of African American History, which was closed because of the shutdown.
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Garbage overflows from a trash can on the National Mall, across from the White House, on Tuesday, January 1. The National Park Service, which is responsible for trash removal, was not operating because of the government shutdown.
Photos: The government shutdown, in photos
Garbage overflows from a trash can on the National Mall, across from the White House, on Tuesday, January 1. The National Park Service, which is responsible for trash removal, was not operating because of the government shutdown.
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This photo, taken on Tuesday, January 1, shows the South Rim of Grand Canyon National Park in Arizona. While parts of the park were closed because of the shutdown, much of its South Rim was open and accessible.
Photos: The government shutdown, in photos
This photo, taken on Tuesday, January 1, shows the South Rim of Grand Canyon National Park in Arizona. While parts of the park were closed because of the shutdown, much of its South Rim was open and accessible.
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A view of the White House in late December.
Photos: The government shutdown, in photos
A view of the White House in late December.
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A public trash can spills over on Washington's Pennsylvania Avenue on Monday, December 24.
Photos: The government shutdown, in photos
A public trash can spills over on Washington's Pennsylvania Avenue on Monday, December 24.
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Two people stand in front of the Lincoln Memorial on Saturday, December 22. Many of the National Mall sights remained open despite the shutdown.
Photos: The government shutdown, in photos
Two people stand in front of the Lincoln Memorial on Saturday, December 22. Many of the National Mall sights remained open despite the shutdown.
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A National Park Service worker prepares to lock the visitor bathrooms at the Lincoln Memorial on December 22.
Photos: The government shutdown, in photos
A National Park Service worker prepares to lock the visitor bathrooms at the Lincoln Memorial on December 22.
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People line up to board a ferry to visit the Statue of Liberty on December 22. The national landmark remained open after New York Gov. Andrew Cuomo made funding available for it.
Photos: The government shutdown, in photos
People line up to board a ferry to visit the Statue of Liberty on December 22. The national landmark remained open after New York Gov. Andrew Cuomo made funding available for it.
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Senate Minority Leader Chuck Schumer arrives at the US Capitol on December 22.
Photos: The government shutdown, in photos
Senate Minority Leader Chuck Schumer arrives at the US Capitol on December 22.
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A road is closed near the Golden Gate National Recreation Area on December 22.
Photos: The government shutdown, in photos
A road is closed near the Golden Gate National Recreation Area on December 22.
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Washington (CNN Business)The government may be back open for business, but the effect of the shutdown will impact economic growth for the rest of year, the Congressional Budget Office said in a report released Monday.

Delayed paychecks, reduced working hours, and stalled contracts led to a loss of about $11 billion in gross domestic product over the five-week shutdown.
About $8 billion of that will be recovered as workers return, but $3 billion or 0.02% of gross domestic product in 2019 will never be recovered, according to the CBO.
    For the last quarter of 2018, which only saw about a week of reduced activity, the level of GDP will be about $3 billion or 0.1% lower than expected, and the annualized growth rate will be 0.2% lower. For the first quarter of 2019, the level of economic output will be about $8 billion lower than expected or 0.2%. The growth rate will be 0.4% lower.
      Most of that is expected to be regained through faster growth later this year, the report notes.
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      The larger effect on the economy reflects a reduction in consumer spending driven by unpaid workers cutting back on purchases. While federal employees will get back pay, most contractors will not.
      Private sector activity may have been lost as a result of the lapse in federal certifications, loans, and permits, as well as general business uncertainty that could impact investment and hiring. The CBO did not take those indirect factors into account, and also cautioned that there might be longer-term consequences for government recruiting.
        "When you do this sort of thing, you affect the morale of federal workers, and it may have an impact on the quality of federal workers going forward," said CBO Director Keith Hall in a briefing with reporters.
        One thing's for sure: The hit would have gotten worse had the funding gap continued.
        "The risks to the economy were becoming increasingly significant as the shutdown continued," the CBO wrote in its report. "Although their precise effects on economic output are uncertain, the negative effects of such factors would have become increasingly important if the partial shutdown had extended beyond five weeks."
        The Bureau of Economic Analysis was scheduled to put out its first estimate for fourth quarter GDP this week, but it announced Monday that it will indefinitely delay reports through next week, given the long break in data collection.
        The CBO's analysis is in line with other of estimates on how big of a chunk the shutdown took out of economic growth.
        S&P Global Economics, for example, projected a loss of $6 billion, though it did not specify how much of that would be made up through subsequent activity. Oxford Economics also projected a 0.2% drag in the first quarter.
          Morgan Stanley's economic team, which did take into effect the indirect effects of the shutdown, forecasts a drag on annualized GDP growth of 0.5% in the first quarter, putting the annualized growth rate at 1.7%.
          The government's finances will take a hit another way, too: The CBO also estimates that tax revenues will be $2 billion lower in 2019 as a result of reduced enforcement by the Internal Revenue Service.