Fox News dismissed a survey of 41 economists who indicated that they are less optimistic about growth after the Republican-led government shutdown, saying their concern “is much ado about nothing.” But numerous reports show that the shutdown had wide-ranging negative effects on the economy.
Economists Less Optimistic About Growth After Shutdown
USA Today: Top Economists “Less Optimistic About Growth Prospects Than They Were Three Months Ago.” USA Today reported that “two weeks after Washington's latest showdown, more than half of economists surveyed by USA TODAY -- 56% -- are less optimistic about growth prospects than they were three months ago:”
Two weeks after Washington's latest showdown, more than half of economists surveyed by USA TODAY -- 56% -- are less optimistic about growth prospects than they were three months ago. The survey of 41 top economists was conducted Oct. 23-24.
What's more, repeated budget battles in Washington the past few years are having a cumulative effect. Sixty-three percent of the economists say the recurring standoffs are hurting the economy “some” or “a lot.” The remainder cite “a little” damage. [USA Today, 10/28/13]
Fox Dismisses Economists: “This Is Much Ado About Nothing”
Jim Lacamp: “This Is Much Ado About Nothing.” On the October 28 edition of Fox News' Your World, Jim Lacamp, a Senior Vice President and Portfolio Manager with Macroportfolio Advisors, said that “a two-week shutdown on a small part of the government has very little to do with economic development,” and added: “This is much ado about nothing.” [Fox News, Your World with Neil Cavuto, 10/28/13]
Neil Cavuto: “You're Talking About Something That Is A Rounding Error To A Rounding Error When You Talk About This Government Disruption.” On Your World, host Neil Cavuto said, “In a multi-trillion dollar economy, you're talking about something that is a rounding error to a rounding error when you talk about this government disruption.” He concluded: “A reminder everyone: multi-trillion economy, teeny, teeny, teeny little shutdown.” [Fox News, Your World with Neil Cavuto, 10/28/13]
Shutdown Has Had Wide-Ranging Effects On The Economy
Standard & Poor's: Shutdown Has Taken $24 Billion Out Of Economy And Cut 0.6% Off Of GDP Growth. Business Insider reported that Standard & Poor's cut its “annualized U.S. growth view closer to 2% from 3%.” S&P also estimated that the shutdown “has taken $24 billion out of the economy and cut 0.6% off of yearly fourth quarter GDP growth.” [Business Insider, 10/16/13, via Media Matters]
NY Times: “The Shutdown Has Already Led To The Biggest Plunge In Consumer Confidence Since The Collapse Of Lehman Brothers In 2008.” A New York Times article pointed out the devastating effects of the government shutdown, including ripple effects to many industries that do business with the government:
The impasse over the debt ceiling has already raised the United States' short-term borrowing costs, with investors demanding triple the interest payments they demanded just a few weeks ago, in some cases. Concerns about the United States as a borrower might have a much longer and deeper effect than the shutdown, analysts think.
“Even with a deal to avoid a default, the damage has been done by the fact that we have had a debate questioning whether the U.S. will pay back its debt,” Laurence D. Fink, the chief executive of the money manager BlackRock, said Wednesday morning. That means higher borrowing costs in the United States, and elsewhere. The World Bank has estimated that a similar standoff in 2011 raised borrowing costs in poor countries by about 0.75 percentage point, and that those costs remained elevated for months. [The New York Times, 10/16/13, via Media Matters]
Time: “Hundreds Of Thousands Of Federal Workers Bore The Economic Brunt Of The Shutdown.” An October 17 article in Time magazine explained that that “hundreds of thousands of federal workers bore the economic brunt of the shutdown” and “small businesses also suffered from frozen government contracts and stalled business loans.” The article outlined the economic costs of the shutdown:
- About $3.1 billion in lost government services, according to the research firm IHS
- $152 million per day in lost travel spending, according to the U.S. Travel Association
- $76 million per day lost because of National Parks being shut down, according to the National Park Service
- $217 million per day in lost federal and contractor wages in the Washington D.C. metropolitan area alone [Time, 10/17/13]
Lockheed Martin CEO: Shutdown's “Situation Of Uncertainty” Affects Company's Plans. CBS reported that Lockheed Martin, the nation's largest defense contractor, furloughed 2,400 people as a result of the government shutdown. Lockheed Martin CEO Marillyn Hewson said: “When we have a situation of uncertainty, whether it's the government shutdown and for how long, whether it's a continuing resolution, whether it happens to be sequestration, all of those things impact our business in terms of decision-making on what we're going to do with our plans going forward.” [CBS This Morning, 10/17/13]