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Market Minute: All I got from the crummy government shutdown is a 1.5% drag on GDP

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The cost of the longest shutdown in U.S. government history should arrive as a 1.5% drag on current-quarter growth, which should result in a boost of 2% growth in the first quarter of next year as government paychecks and transfers are consummated over the next few months.

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Dislocation around government paychecks, SNAP payments and the permanent loss of income by government contractors over the past six weeks will take a number of weeks to unwind. For this reason, there is downside risk to our economic impact estimate during the first three months of next year.

In addition, with ACA subsidies set to expire in January, middle class, working class and those among the working poor who get their health care through the Obamacare exchanges will see notable increases in costs that will dampen consumption along the lower spur of the K-shaped American economy.

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About Joseph Brusuelas

@JoeBrusuelas

Joe Brusuelas, “chief economist to the middle market,” is the preeminent voice championing issues and policies facing midsize companies in the United States and around the world. An award-winning economist, Brusuelas has more than 20 years’ experience analyzing U.S. monetary policy, labor markets, fiscal policy, international finance, economic indicators and the condition of the U.S. consumer.

A member of the Wall Street Journal’s forecasting panel and the UCLA Anderson School of Management's Board of Directors, Brusuelas regularly briefs members of Congress and other senior officials regarding the impacts of federal policy on the middle market and the factors by which middle market executives make business decisions. He also frequently offers his insights on the U.S., Canadian and global economies in the financial media. In 2020, he was named one of the 100 most influential economists by Richtopia. In December 2023, Brusuelas and the economics team were recognized on Bloomberg's list of Best Bond Forecasters after correctly predicting where the benchmark Treasury would end the year.

Before joining RSM in 2014, Brusuelas spent four years as a senior economist at Bloomberg L.P. and the Bloomberg Briefs newsletter group, where he co-founded the award-winning Bloomberg Economic Brief. Earlier in his career, he was a director at Moody's Analytics covering the U.S. and global economies for the Dismal Scientist website. He also served as chief economist at Merk Investments L.L.C. and chief U.S. economist at IDEAglobal.

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