As we slog through Day 8 of the federal government shutdown with no light evident at tunnel's end, I'm struck by the inconsistency of opinion about how likely this stoppage is to inflict real damage on the economy. For example:
The Washington Post says the shutdown won't clobber the economy, but the looming debt default could be catastrophic.
Slate says the truth is we just don't know—and backs that non-verdict with the salient point that the Bureau of Labor Statistics has furloughed the majority of its workers, which cuts the flow of government-generated data about the economy.
Smart Company says Australia's federal treasurer, Joe Hockey, seems to be straddling the crease.
Bloomberg BNA says the long-term economic effects of the shutdown will be negligible outside Washington and other places where employment is dominated by federal workers.
PBS says a two-week shutdown would shave three-tenths of a percent off of GDP; a monthlong stoppage would cut it by at least 1%; the defense sector will suffer the biggest hit, followed by travel, tourism, leisure and hospitality; and the auto industry could take a hit as well.
CBS says the shutdown's economic effects "may be slim" and estimates that a one-week shutdown (which, of course, we exceeded today) would shave less than a tenth of a point from fourth-quarter GDP.
BBC News quotes U.S. Commerce Secretary Penny Pritzker as saying that U.S. businesses are starting to feel the effects of the shutdown, citing as evidence last Friday's news that defense contractor Lockheed Martin is putting 3,000 workers on unpaid leave. (Lockheed has since reduced the number of workers it is temporarily laying off to 2,400.)
Time says that apart from the obvious impact on furloughed federal workers, the earliest effects of the shutdown are likely to be felt in the recovering housing sector; and that if this shutdown lasts as long as the last one in 1995-96—i.e., 26 days according to the Time story or 21 days according to Wikipedia—it would shave 0.8% from economic growth in the fourth quarter.
The New York Times reports that the Bureau of Economic Analysis is yet another federal agency that has been temporarily shuttered, leading to the ironic conclusion that "if the shutdown drags on, it will be increasingly difficult to assess its economic damage."
I understand the thinking there. We business types, especially the stat wonks among us, will be lost at sea with our precious data flow cut off. But I believe that if the shutdown drags on for an extended period, plenty of other ways to assess its economic damage will surface. Photos of people queueing up outside employment agencies is one example that springs to mind. I hope our myopic leaders summon the political courage to not let it get to that.
