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Rethinking the gov't shutdown cost

Friday, October 25, 2013 - 02:01

Oct. 25 - The number crunching is in full swing on the economic impact of the shutdown- and some of the results are surprising. Bobbi Rebell reports.

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The government shutdown math is getting fuzzier. Original estimates were that it cost the U.S. economy $24 billion. But now economists are rethinking that as new data comes out. Max Wolff, chief economist at ZT Wealth: SOUNDBITE: MAX WOLFF, CHIEF ECONOMIST, ZT WEALTH (ENGLISH) SAYING: "I think brand America took a hit in all four corners of the globe here. The official numbers are around $24 billion dollars in immediate cost to GDP. My guess is you are looking at 2-3 times that number so $50 to $75 billion total loss. And the $64,000 question remains was that just the appetizer for the big disaster coming in a few months or can we maybe finally get this game of chicken with the U.S. economy behind us on a basic procedural level. " But over at Wells Fargo, Senior Economist Mark Vitner says no way! SOUNDBITE: MARK VITNER, SENIOR ECONOMIST, WELLS FARGO (ENGLISH) SAYING: "There was some pullback in economic activity during the first two weeks of October but I think that that was fairly limited and I think that $24 billion number that has been thrown around- I think the actual loss was maybe just half that." The data itself tells an interesting story- consumer sentiment weakened sharply in October. And new orders for non- military capital goods, excluding planes, fell. That could be a sign businesses were watching their pennies because of the politician dysfunction in D.C. But businesses like Boeing and Ford - have indicated they haven't been deeply impacted by the shutdown. And on a macro level- things were already slowing down: SOUNDBITE: MARK VITNER, SENIOR ECONOMIST, WELLS FARGO (ENGLISH) SAYING: "The economy had lost a lot of momentum before the government shutdown. I don't think the shutdown made all that much different but growth is likely to be weaker going forward. And there is at least as much uncertainty about fiscal policy as there was prior to the shutdown, maybe even more because we have this super, duper, committee, and then we have a budget deadline for the continuing resolution and then another debt ceiling deadline in front of us. " That next shutdown deadline is January 15th- the debt ceiling deadline is February 7th.

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Rethinking the gov't shutdown cost

Friday, October 25, 2013 - 02:01