Shutdown's damage to economy could exceed $5.7 billion cost of Trump's border wall

By Megan Cerullo

/ MoneyWatch

Democrats reject Trump's plan to end shutdown

The government shutdown — the longest in U.S. history — is estimated in 31 days to have cost the American economy almost as much as the $5.7 billion President Trump has demamnded for his proposed southern border wall.

Average weekly direct and indirect costs of the partial shutdown, which began Dec. 22, currently add up to $1.2 billion, according to Beth Ann Bovino, S&P Global's U.S. chief economist. Monday marked the start of the shutdown's fifth week, and the closure will have caused roughly $6 billion in damage to the economy if the government does not reopen by the end of the week, Bovino estimated in a recent research note.

And the average weekly cost of the shutdown is expected to grow as the damage to industries and consumers both widens and deepens. "The longer this shutdown drags on, the more collateral damage the economy will suffer," Bovino wrote.

Direct effects of the marathon shutdown include lost productivity from the hundreds of thousands of furloughed workers who haven't been paid since the Dec. 22 closure. While the precise impact has not been calculated, the Bureau of Economic Analysis estimates that federal employees' lost hours during a 16-day shutdown back in October 2013 reduced fourth-quarter GDP by 0.3 percentage points.

NASA employees working without pay to protect critical missions

"As in previous shutdowns, the productivity lost from furloughed government workers will never be regained. In real terms, GDP will be lower since no 'product' was created," the S&P Global note said.

Federal workers will be compensated when the government reopens, but workers in the roughly 4 million private-sector jobs that depend on the federal government won't receive back pay, according to Capital Economics.

The longer the shutdown extends, the more grave its impact could be if it starts to affect unpaid workers' consumption, for example.

The partial closure of the Securities and Exchange Commission will delay companies' plans to file initial public offerings, at least until it reopens, and the Treasury's shutdown threatens to delay income tax refunds, which could have a dampening effect on sectors that tend to benefit from tax-refund spending, including auto retailers, according to Raymond James.

Private businesses that depend on visitors to national sites are also feeling the pinch as Americans cancel their vacations to national parks, museums and monuments that are closed.

An extended shutdown could reach even further into American households by causing these businesses to reduce their staffs — taking wages away from private citizens.

First published on January 21, 2019

© 2019 CBS Interactive Inc.. All Rights Reserved.

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