Report estimates shutdown cost economy $11 billion, $3 billion won't be recovered

The cost of the shutdown will make the US economy 0.02 percent smaller than expected in 2019, a report by the nonpartisan Congressional Budget Office (CBO) said.

The CBO said that prior to the shutdown it expected the United States economy to grow by about 2.3% in 2019, slowing from 2018 as a boost from federal spending and 2017 tax cuts fades.

According to the CBO's report, the economy lost $11 billion during the shutdown, which began just before Christmas, but will gain back $8 billion now that the government has reopened. The CBO says the shutdown will have a modest negative impact on the economy, lowering projections of economic growth by 0.4 percentage points to 2.1 per cent in the first quarter, though the economy is expected to mostly make up for it over the rest of the year.

CBO said uncertainty surrounded its report, particularly regarding the shutdown's effects on federal compensation, due, in part, to the fact that the number of furloughed federal workers fluctuated over the course of the shutdown.

The $3 billion reflects a hit of 0.1 percent to economic activity during the fourth quarter of 2018 - an amount that will be permanently lost.

When the Congress completes its bipartisan, bicameral work to fund government, the President should swiftly sign that legislation to avert another shutdown and restore certainty to our economy and the lives of the American people.

The shutdown was spawned over Trump's demand for $5.7 billion for a border wall to thwart illegal immigration, perhaps his most prominent 2016 campaign pledge during his successful run for the presidency.

Trump said he would be willing to shut down the government again if lawmakers don't reach an acceptable deal, but on Sunday expressed skepticism that such an agreement could be reached. It remained to be seen how lawmakers address border security before the February 15 deadline while avoiding another closure.

The CBO said the $3 billion permanently lost to the US economy means the projected 2019 gross domestic product of more than $19 trillion will be.02 percent smaller than it otherwise would have been.

"Underlying those effects on the overall economy are much more significant effects on individual businesses and workers", the report said.

Graphic shows the longest shutdowns in USA history.

Some of the affected private-sector businesses will never recoup the income they lost, CBO said.

The report discussed other indirect effects of the shutdown as well, which it said were hard to quantify.

The report says that because of the shutdown, which lasted from December 22 through last Friday, about $18 billion in discretionary government spending was delayed.