The Trump administration this week doubled its forecast for the cost of President Donald Trump’s government shutdown.
CNBC reported that original cost estimates said that the shutdown would subtract 0.1 percentage point of growth from the economy every two weeks. An anonymous Trump administration official told the network that the estimate had been doubled to 0.1 percentage point every week.
The administration had initially counted just the impact from the 800,000 federal workers not receiving their paychecks. But they now believe the impact doubles, due to greater losses from private contractors also out of work and other government spending and functions that won’t occur.
If the shutdown lasts the rest of this month, it could subtract a sizable half a percentage point from gross domestic product, the official said.
The revision comes as some economists worry that the shutdown could wipe out first quarter growth entirely.
In call with reporters, JPMorgan CEO Jamie Dimon echoes reporting from @morningmoneyben that if the partial government shutdown continues throughout the quarter, it could wipe out Q1 economic growth entirely. pic.twitter.com/VfA3KxCNjV
— Victoria Guida (@vtg2) January 15, 2019
Ian Shepherdson of Pantheon Macroeconomics wrote in a report that growth could turn negative.
“If the shutdown were to last through the whole quarter, we would look for an outright decline in first quarter GDP,” Shepherdson explained.