The Trump administration now estimates that the cost of the government shutdown will be twice as steep as originally forecast, CNBS reports.
The original estimate that the partial shutdown would subtract 0.1 percentage point from growth every two weeks has now been doubled to a 0.1 percentage point subtraction every week, according to an official who asked not to be named.
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 the gross domestic product, the official said. The subtraction from growth would add to the troubles of an economy already thought to be slowing from the waning effects of tax stimulus, trade tensions and gathering global weakness.
The administration’s estimate is more aggressive than some forecasts from Wall Street economists. Those estimates have centered around a 0.1 percentage point cut to growth every two weeks. They have been rising, however, as it looked like the shutdown would drag on.
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