Our rating: Mostly True
Now that we’re living in a federal government shutdown, what’s the hit to the economy? U.S. Rep. Debbie Wasserman Schultz, D-Fla., wagged her calculator at the GOP and cited a whopping figure on Twitter.
“$10 billion in costs to the economy per week and this is what the R’s had to say?” tweeted Wasserman Schultz, D-Weston, who also serves as the chair of the Democratic National Committee.
We wanted to check her number: How much will the shutdown cost the economy?
Predictions about economic shutdown
Wasserman Schultz’s numbers are the same as those from the White House. A White House spokesman said the $10 billion figure came from an August report from the investment group Goldman Sachs. We also found similar estimates from Moody’s and IHS.
These financial firms agree that the impact depends on how long the shutdown goes on. The impact gets worse the longer a closure lasts.
“A brief shutdown would delay, not cancel, most spending,” said the Goldman Sachs report. “In a brief shutdown, it is likely that only federal employee compensation would be lost — most of the other activity would just be delayed and made up later. A longer shutdown — the longest shutdown on record in late 1995 and early 1996 lasted about three weeks - would affect a greater share of federal activities.”
The report includes three scenarios based on a two-day, one-week and three-week shutdown. It predicts a $2.6 billion economic loss for a two-day shutdown, $10.4 billion for a week and $36.8 billion for three weeks.
Moody’s found that a shutdown lasting three to four weeks would cost $55 billion, with costs accelerating as time goes on. Moody’s takes into account the losses from federal workers not getting paid, the delay of housing and small business loans, the hit to tourism spending and the interruptions for contractors.