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Congressional Budget Office: US GDP lost $3 billion in shutdown

The CBO added that there were other indirect costs that it could not calculate

ERIC BARADAT/AFP/Getty Images

According to a new report from the Congressional Budget Office, the U.S. gross domestic product lost $3 billion over the course of the shutdown that it will not recover in 2019.

Here's what we know

According to the CBO's report, the GDP was down by a total of $11 billion due to the shutdown but was expected to recover $8 billion later in the year — meaning $3 billion would never be recovered.

This, the CBO estimated, reduced the "annualized quarterly growth rate of real GDP for the fourth quarter of 2018 by 0.2 percentage points. CBO also estimates that the shutdown will lower that annualized growth rate in the first quarter of 2019 by 0.4 percentage points."

However, it also predicted that the second quarter GDP for 2019 would see a 1.0 percent boost. Of course, this prediction is based on the assumption that the federal government will not shut down for a second time on Feb. 15.

The deal that President Donald Trump announced Friday keeps the government open for only three weeks, pending a new deal. Trump has said that he will not sign any bill to fund the federal government that does not include $5.7 billion in funding for a wall on the border between the U.S and Mexico. Democrats in Congress have so far been unwilling to agree to any bill that contains funding for a border wall.

The CBO report took into account a number of factors, including the total amount of money furloughed workers would be paid (and have been paid since the government was temporarily reopened), and the amount of revenue lost to the government due to services that were suspended during the shutdown.

For example, it noted that "the fees to enter national parks and other federal recreational areas amount to roughly $500 million in a full year." It also predicted that tax revenue would be $2 billion lower this year than it could have been, due to the IRS being shut down.

These estimates only deal with the direct effects of the shutdown

The CBO warned that its estimates were "subject to considerable uncertainty." It noted that it had not included "a number of indirect negative effects" because they were "more difficult to quantify."

As an example, it noted that during the shutdown, "businesses could not obtain federal permits and certifications, and some faced interrupted access to federal subsidies and loans provided by the federal government." It also pointed to a lack of economic data from federal agencies during the shutdown, which may have resulted in businesses holding off on hiring.

"Although their precise effects on economic output are uncertain," the CBO concluded, "those factors would have had increasingly negative effects if the partial shutdown had extended beyond five weeks. And other disruptions would have probably emerged."

One last thing…
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