Government Shutdown Would Shave Growth

Fourth-quarter GDP gain could be reduced by as much as 1.4 percentage points, says Moody's Analytics.

A shutdown of the U.S. government would reduce fourth-quarter economic growth by as much as 1.4 percentage points depending on its length, economists say, as government workers from park rangers to telephone receptionists are furloughed.

Mark Zandi of Moody’s Analytics Inc. estimates a three-to-four week shutdown would cut growth by 1.4 points. Moody’s projects a 3 percent rate of growth in the fourth quarter without a closure. A two-week shutdown starting Oct. 1 could cut growth by 0.3 percentage point to an annualized 2.3 percent rate, according to St. Louis-based Macroeconomic Advisers LLC.

Back Pay

Spending by government workers is unlikely to be affected because they will expect to receive back pay after returning to work, according to Macroeconomic Advisers.

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