Last month I wrote a short article on the government shutdown and how it may affect the U.S. economy and real estate, and linked it to an interesting article written by Brian Summerfield for the National Association of Realtors titled “Would a Gov’t Shutdown Affect Foreign Investors’ View of U.S. Real Estate?”
This time around, I thought I’d reveal how much the government shutdown actually affected the U.S. economy.
In a new report released from the White House, “Impacts and Costs of the October 2013 Federal Government Shutdown,” independent forecasters estimate that the shutdown will lower fourth quarter real GDP growth by 0.2 percentage points to 0.6 percentage points — or $2 billion to $6 billion in lost output.
That loss was due to some items such as halted permitting and environmental and other reviews delaying job-creating transportation and energy projects, hindering trade by putting import and export licenses and applications on hold, disrupting private-sector lending to individuals and small businesses, and halting federal loans to small businesses, homeowners, and housing and healthcare facility developers, to name a few.
In a recent article, “Government shutdown: Killer bees win, beer exporters lose,” Olivier Knox reports a few of the lesser but also important impacts of the shutdown:
- About 200 permits to drill on federal lands languished unapproved.
- The Treasury Department couldn’t issue export certificates for beer, wine and liquor, so 2 million liters due for export were stranded at ports.
- The shutdown delayed the start of the Alaska crabbing season three to four days at a cost to fisherman of thousands of dollars of lost revenue per day.
- National parks were closed, resulting in the loss of about $500 million in lost visitor spending nationwide (affecting not just parks, but the communities near them that depend on tourism revenue).
- Federal employees were furloughed for a combined 6.6 million days. Not to worry: They received back pay for days they didn’t work, to the tune of about $2 billion.
- The shutdown delayed about $4 billion in tax refunds, and prevented hundreds of patients from taking part in clinical trials at the National Institutes of Health — frequently the last shot chronically or even terminally ill Americans have at treatment.
- Four out of the five Nobel Prize–winning researchers currently working for the federal government? Furloughed.
- Government scientists will have to push back by six months the testing of a new approach for curbing the spread of Asian carp into the Great Lakes.
On a more positive note, The New York Times, in an article titled “Markets Higher After Strong Jobs Report,” reported that economists had forecast that employers added 122,000 jobs in October, but that the 204,000 jobs added in the month was sharply higher than the 163,000 jobs added in September. The average job gain in the first nine months of this year was about 180,000. Also the unemployment rate rose to 7.3 percent from 7.2 percent, the first rise since May.
The article does note that many analysts doubt the accuracy of the first round October employment figures because of the shutdown during much of that month.
Dan Greenhaus, chief global strategist at BTIG, stated in the article that given the impact of the shutdown, we have to wait until November’s report to get a fuller picture of what’s happening this fall.
We may not know yet how the shutdown affected us, but soon enough we’ll see the consequences/benefits of what has already been decided.
Denise DeChaine is special projects editor at Institutional Real Estate, Inc.
