The first federal government shutdown in 17 years, triggered by a Republican demand to defund the Affordable Care Act on Oct. 1, cost the U.S. $24 billion in potential economic activity — equalling at least 0.6% of projected annualized fourth-quarter 2013 GDP growth, according to ratings agency Standard & Poor’s.
Instead of the 3% annualized growth fourth quarter originally projected in September, S&P now forecasts actual fourth-quarter growth near 2%, the agency said in a press release:
As we’ve said, we expect the Senate deal to be approved. However, the current chatter coming out of Washington suggests that any continuing resolution will be a temporary one, with an early 2014 timeframe for the next set of Washington deadlines. The short turnaround for politicians to negotiate some sort of lasting deal will likely weigh on consumer confidence, especially among government workers that were furloughed. If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they’ll remain afraid to open up their checkbooks. That points to another Humbug holiday season.