You’re not going to like this, America (and the rest of the world).
BOSTON — There’s been a lot of chatter the past couple days about what the 16-day US government shutdown will cost the world’s largest economy.
Standard & Poor’s has something rather stunning to say on the matter.
“We believe that to date, the shutdown has shaved at least 0.6% off of annualized fourth-quarter 2013 GDP growth, or taken $24 billion out of the economy,” the ratings agency said yesterday.
How can you wrap your head around that number?
Take a single $100 bill. Now stack 240 million of those Benjamins and you’ve got a pile of money that represents what fueding congressional members have cost America the past two weeks.
On the macroeconomic side, Standard & Poor’s estimates the US economy will now grow at a rate of 2.4 percent in the fourth quarter, not the 3 percent rate the world was expecting before the shutdown.
Others have less dire — though still large — shutdown cost predictions: Macroeconomic Advisors, for example, puts the number at about $12 billion.
Here’s a breakdown of other specific shutdown damages, compiled by our friends at CNN Money/Time:
— $3.1 billion in lost government services, according to the research firm IHS
— $152 million per day in lost travel spending, according to the US Travel Association
— $76 million per day lost because of National Parks being shut, according to the National Park Service
— $217 million per day in lost federal and contractor wages in the Washington DC metropolitan area alone
But it’s even worse than all this.
As Quartz’s Tim Fernholz points out, the last government shutdown in 1995-96 cost $1.4 billion in additional operating costs. Reopening thousands of offices and kickstarting operations doesn’t come cheaply.
The shutdown also drove up short-term interest rates on the money the US Treasury borrowed during the 16-day crisis. Those higher rates are estimated to cost taxpayers tens of millions of additional dollars.
And then, of course, there’s all the international political damage associated with the shutdown.
China and Japan — America’s two largest foreign creditors — have repeatedly and openlycriticized Washington’s handling of the debt mess.
International Monetary Fund director Christine Lagarde, too, has been a vocal critic.
But here’s the worst part.
This debacle isn’t over.
The late-night deal to reopen the government is only a temporary measure, which means we’re likely to be re-fighting these same battles later in the year and into 2014.
I’ll give the last angry word to Citi’s chief US equities strategist Tobias Levkovich, whounleashed this diatribe in a note to clients:
“Kicking the proverbial can down the street does not address the long-term fiscal imbalances (of the United States). Investors typically do not like uncertainty and it is hard to determine how these recent almost non-decisions can be seen as reinvigorating confidence aside from some relief that an imminent likely disaster has been avoided. Nonetheless, one cannot respectably believe that things truly have turned for the better as opposed to averting the worst. The long-term growth of non-discretionary government spending can still prove to be an overwhelming liability and it has not been the primary focus for legislators.”
No, Wall Street, the world and the rest of America are none too happy with Washington, DC right now.
Let’s hope the message is getting through.
This article originally appeared in GlobalPost.