Overview
- In a new letter to House Budget Chair Jodey Arrington, the CBO estimates permanent GDP losses of $7 billion if the shutdown ends this week, $11 billion if it lasts six weeks, and $14 billion if it extends to eight weeks.
- The analysis projects a 1 to 2 percentage point hit to fourth-quarter growth, with most activity rebounding after agencies reopen but not the output lost while employees were furloughed.
- CBO identifies delayed federal compensation, purchases of goods and services, and disruptions to food assistance as key drivers of the downturn.
- Using agency data, the CBO estimates roughly 600,000 excepted employees working and about 650,000 furloughed on average, with the administration reallocating funds to pay troops and some law enforcement.
- SNAP benefits are uncertain beyond Oct. 31, and the CBO assumes a 50% chance payments continue if the lapse persists as states sue to sustain aid and Congress remains deadlocked over ACA subsidies versus a clean stopgap.