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Monday, January 28, 2019

Trump's Partial Shutdown Cost $11 Billion


Trump's government shutdown over illegal immigration cost the United States $11 Billion in Real GDP according to a non-partisan analysis by the Congressional Budget Office (CBO).


The recent debacle with the immigration hysteria has caused the partial shutdown of the government that started December 22nd, 2018 under President Donald Trump and ended on January 25th, 2018. The business outlook was looking bleak but it may be improving since the shutdown was lifted. The Democrats and Republicans have still not come to an agreement on the southern border wall dilemma which has affected the lives of so many americans that rely on social services, immigrants and tourists coming to this country and has negatively impacted our economy, permanently.

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The CBO concluded that the shutdown had delayed $18 Billion worth of discretionary spending and from shutting down some non-essential federal agencies. In the 4th Quarter of 2018, the US lost $3 Billion of Real GDP (Gross Domestic Product) as a result of reduced economic activity. In the first Quarter, so far, the United States lost $8 Billion in Real GDP growth ($11 Billion total loss in Real GDP). The GDP expected growth rate for the entirety of the 1st Quarter of 2019 suffered, as it fell 2 points (-0.02% GDP Growth). The shutdown resulted in a permanent -.01% loss in GDP for the 4th Quarter of 2018.

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The CBO noted that the economy can recover from the majority of the losses over time, as GDP growth may pick up in the 2nd Quarter of 2019 from a rise in economic activity, however $3 Billion of real GDP will not be recovered after the shutdown. The individual impact on the poorest Americans and small business owners that rely on government services could mean a hard recovery down the road.  The biggest effect of the economy came from the furloughed federal employees who were not able to contribute to the economy, thus slowing economic growth (according to the CBO). It could take an entire year to recover (fair assessment). CBO expects an economic increase from the Shutdown of .01% for the 2nd and 3rd Quarter of 2019 as economic activity picks up, and uncertainty falls.

If there is no agreement on the border wall we may enter into another government shutdown which could have far more negative impacts on the economy, and could halt global trade.