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.
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.
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.
