S&P: Shutdown and debt battle cost U.S. economy $24 billion
White House Chief of Staff Denis McDonough greets returning White House employees after the government shutdown ended and employees could return to work outside the Eisenhower Executive Office Building adjacent to the White House in Washington, DC, October 17, 2013.
There has been a cost to the gridlock in Washington over the past few weeks. Standard and Poor’s puts it at $24 billion. S&P says that $24 billion loss will shave at least 0.6 percent off fourth quarter GDP growth. And the costs are likely to continue, because the agreement to re-open the government and raise the debt ceiling is only temporary. Sam Stovall is chief equity strategist at S&P Capital IQ. He says businesses will be reluctant to invest in this atmosphere.
“Companies who are sitting on hordes of cash are going to be less willing to spend that cash if they realize that another fight is just around the corner,” Stovall says.
Consumer confidence is also taking a hit, which leads other economists to worry they’ll spend less during the all-important holiday shopping season. And there’s another cost to the government -- it’s having to pay more to borrow money. IHS Global Insight estimates higher interest rates will add $114 million to the federal debt.