The border wall spending bill standoff has lasted nearly a month, and it's beginning to take a toll on the US economy. The US has officially lost almost $3.6 billion that could've been channeled towards transfer payments or overall economic growth.
Investment in public goods and infrastructure has slowed. Key economic reports and data that Wall Street uses as a gauge of the country's financial health have been delayed. Small business owners all over the country on the daily are feeling the impact, as entrepreneurs are unable to process loans due to a shortage of federal manpower. Roughly 800,000 federal employees aren't receiving wages.
Economic output forecasts have fallen by 0.9% from the 3.1% growth rate recorded in 2018, to 2.2%. As the shutdown drags on past its 26th day on Wednesday, January 16, these estimates are likely to fall even further.
Ian Shepherdson of Pantheon Macroeconomics said in a research note over the weekend: "Even a one-month shutdown would seriously hit growth, to say nothing of the misery caused," he wrote. The effects will be even worse if the shutdown continues through the quarter: "We would look for an outright decline in first quarter GDP."
Contractors working with the government haven't been paid yet. These 4 million contract employees and the furloughed federal employees may eventually put a dent in the national level disposable income. If this persists, the economy will not be able to correct itself appropriately and both aggregate demand and supply will decrease. If supply decreases to a larger extent than demand, this could invoke cost-push inflation which would exacerbate the economy's woes.
Wall Street and white-collar jobs are also feeling the pinch. An understaffed SEC has slowed the antitrust review and IPO filing process. They're no longer assessing proxy and registration statements, and the agency isn't available to offer guidance to companies making regulatory filings.
"At the aggregate level, the economy generally does not reflect much damage from a shutdown," said Fed Reserve Chair Jerome Powell last week. However, he stated that a persisting shutdown would have tangible consequences and impact the economy, causing a ripple affect to be felt throughout the year: "A longer shutdown is something we haven't had. If we have an extended shutdown, then I do think that would show up in the data pretty clearly.