Tags: Hour | Start | Shutdown | Cost

$40 Million an Hour? That's Just the Start of Shutdown Cost

By    |   Sunday, 06 Oct 2013 07:57 PM

By one estimate, the cost of the government shutdown is more than $40 million an hour, a third of a billion a day, and $1.6 billion a week.

And that's just a conservative estimate, writes Richard Eskow, a senior fellow for Campaign for America's Future, in an article for The Huffington Post.

Eskow cites Morgan Stanley analysts who estimated the shutdown will cost the economy $1.6 billion a week; they calculated that by estimating the income of furloughed federal workers at one basis point (0.01 of one percent) of GDP a week. That comes to $1,623,774,600. That equals $324,754,920 a day based on a five-day work week and $40,954,365 an hour.

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"This stunt isn't just costly and wasteful. It's endangering a fragile economy, and the jobs that go with it," writes Eskow, a former executive. And there could be other costs. That's where speculation comes into play.

For instance, costs of a fast-spreading disease could be huge if an FDA inspector misses an outbreak.

Eskow lists what has come to a halt. No Small Business Administration loans to small businesses creating jobs. No more patients for NIH experimental treatments. No more disaster relief in Colorado. No food assistance for needy children.

Costs which are difficult to qualify will ripple through the economy, he warns. The Washington, D.C., area will be particularly hard hit, losing perhaps $200 million a day, he says, citing data from George Mason University's Center for Regional Analysis.

"Since only 15 percent of federal workers live in the D.C. area, the true cost of the shutdown nationwide (including parts of the country with lower living costs) could conceivably be a billion dollars per day or more."

Yet the costs of hitting the debt ceiling could be much larger, Eskow warns. "The Republicans are tampering with an extremely fragile economy, endangering a recovery that has yet to reach millions of struggling Americans. The worst time to play fiscal games is when the economy's already in danger, and that's exactly what Republicans are doing."

IHS Global Insight estimates the shutdown is costing about $1.6 billion a week, $300 million a day, or $12.5 million an hour, reports NBC. "Although $300 million per day sounds like a big number, it is only a couple of thousandths of a percent of the total GDP," which is about $16 trillion, Paul Edelstein, director of financial economics at IHS, told NBC.

Economists agree that the longer the shutdown lasts, the more it will damage the economy.

"The economy is already weakened by continued high unemployment, as well as underemployment, which both impact consumers’ spending power," said John Challenger, chief executive officer of global outplacement consultancy Challenger, Gray & Christmas Inc., according to NBC.

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By one estimate, the cost of the government shutdown is more than $40 million an hour, a third of a billion a day, and $1.6 billion a week. And that's just a conservative estimate, writes Richard Eskow, a senior fellow for Campaign for America's Future.
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