What’s the Price Tag of the Government Shutdown? Economists Weigh In
Roughly 800,000 federal workers will be missing out on their second paycheck Friday. Some of those employees are turning to local food banks to help make ends meet – a strategy U.S. Commerce Secretary Wilbur Ross said he finds unnecessary.
“The 30 days of pay that some people will be out, there’s no real reason why they shouldn’t be able to get a loan against it, and we’ve seen a number of ads of financial institutions doing that," Wilbur said in an interview Thursday morning on CNBC’s “Squawk Box.”
The comment prompted backlash from some Democrats, including House Speaker Nancy Pelosi.
“Is this the ‘Let them eat cake’ kind of attitude?” Pelosi asked Thursday during a press briefing at the Capitol, referring to a phrase commonly associated with 18th century French Queen Marie Antoinette.
“Or, ‘Call your father for money?’ Or, ’This is character-building for you; it’s all going to end up very well — just as long as you don’t get your paychecks?’” she said.
The shutdown, now in its 34th day, has been sparking discussion about its day-to-day effects, but how will it impact the American economy over the course of 2019?
“Its impact will be minimal because it involves too few people relative to the size of the economy,” said Mike Miller, an associate professor of economics at DePaul University.
“The number of workers affected is somewhere one-half of 1 percent of all workers, and the compensation that they receive is about one-tenth of 1 percent of all workers,” he said. “So even if they’re gone for a little while, it’s not going to make a huge difference.”
Edward Stuart, a professor emeritus of economics at Northeastern Illinois University, said the shutdown’s impact adds to what seems to be a growing number of global fiscal fiascos.
“Like trade wars and Brexit and [the North America Free Trade Agreement] fighting and all those other things,” he said. “It just another nail in the coffin of the American economy.”
Stuart said he predicts economic tensions in North America, Europe and China will result in a slow growth for the GDP in 2019, estimating growth at less than 1 percent.
Miller, on the other hand, said he predicts growth to be at 2 or 2.5 percent, which is less than what the market has seen in recent years.
“That’s not necessarily a bad thing,” he said. “We don’t want the economy to overheat and to be running so fast that we don’t have the people nor the capacity to meet the needs of the people who are spending in large quantities.”