Posted Thursday, Oct. 17, 2013
MCT
A women holds a sign outside the U.S. Capitol after Senate leaders announced a deal to end the government shutdown.
The economy already was slowing ahead of the debacle in Washington, and for more than half of October, there’s been no official government data on which to gauge the health of the economy.
“It feels like things have gone a bit soft, but we really don’t have the hard data to know to what degree that happened,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics.
There’s plenty of anecdotal evidence, though, that harm has been done.
One gauge came Wednesday from the Investment Company Institute, which reported that for the week ending Oct. 9, investors had pulled about $3.1 billion out of mutual funds composed of stocks and another $2.6 billion fled these funds made up of bonds.
More evidence came in the recent Economic Confidence Index, published regularly by Gallup. The reading for the three-day period that ended Oct. 3 had fallen 12 points in less than a week. That caught the attention of the National Retail Federation, whose members hire in big numbers.
“Only the collapse of Lehman Brothers in September 2008 has done more damage to consumer confidence in such a short period of time,” the retail federation said Oct. 9 in a statement. “Retailers represent the sector of the American economy that is most closely tied to consumer attitudes, and these numbers are deeply concerning.”
A week later, the confidence reading had fallen another 5 points.
Gallup’s numbers in August 2011, the last debt-ceiling battle, showed sharp drops in confidence that later translated into lower retail sales and economic deterioration.
This year’s uncertainty follows a drag on growth that began early this year with the end of a holiday on payroll taxes and continued with reduced federal spending, especially defense spending.
Economists think that these factors and political squabbling will combine to shave about 1.5 percentage points off what the nation’s growth rate otherwise would have been in 2013.
“I don’t think it has undermined the recovery . . . but it certainly is going to take a bite out of growth,” Zandi said. “Brinksmanship just adds to the weight of fiscal policy on the economy.”
Wells Fargo Securities in Charlotte, N.C., estimates that the shutdown will lop off no more than half a percentage point of growth over the final three months of this year.
“The primary reason for the minimal economic impact during this shutdown stems from the fact that most of the negative effects and the subsequent positive bounce-back effects are currently expected to be contained within the same quarter of growth,” John Silvia, the group’s chief economist, wrote Wednesday.
Economists are looking carefully at same-store sales and similar retail data to gauge how much the sap in confidence will affect holiday sales.
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Government shutdown took $24 billion out of economy, according to Standard & Poor's
Posted: 8:09 PM
Last Updated: 18 hours and 11 minutes ago
Last Updated: 18 hours and 11 minutes ago
NEW
YORK - The United States may have dodged an economic catastrophe by
raising the debt ceiling and opening the government, but it didn't
emerge from the political debacle unscathed.
The 16-day government shutdown took a $24 billion chunk out of the U.S. economy, according to an initial analysis from Standard & Poor's.
As a result, the rating agency projects that the U.S. economy will grow by an annual pace of around 2.4% in the fourth quarter -- as opposed to the roughly 3% growth rate predicted prior to the shutdown.
"Given the size of the economy, it's small. But because it's happening all at once, so quick, so fast, unplanned; it's going to hurt," said Beth Ann Bovino, U.S. chief economist at S&P. "We can absorb it, but it still hurts."
Hundreds of thousands of federal workers were furloughed during the shutdown, but that was just one of the widespread effects of the first shutdown in nearly two decades.
Federal contractors also furloughed thousands of employees. Small businesses reeled from frozen government contracts and stalled business loans. Closed national parks hit the tourism industry, while military families saw childcare and other services shuttered.
Read More Here
The 16-day government shutdown took a $24 billion chunk out of the U.S. economy, according to an initial analysis from Standard & Poor's.
As a result, the rating agency projects that the U.S. economy will grow by an annual pace of around 2.4% in the fourth quarter -- as opposed to the roughly 3% growth rate predicted prior to the shutdown.
"Given the size of the economy, it's small. But because it's happening all at once, so quick, so fast, unplanned; it's going to hurt," said Beth Ann Bovino, U.S. chief economist at S&P. "We can absorb it, but it still hurts."
Hundreds of thousands of federal workers were furloughed during the shutdown, but that was just one of the widespread effects of the first shutdown in nearly two decades.
Federal contractors also furloughed thousands of employees. Small businesses reeled from frozen government contracts and stalled business loans. Closed national parks hit the tourism industry, while military families saw childcare and other services shuttered.
Read More Here
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