Although the latest manufactured fiscal crisis is over for now, brinkmanship over funding the government and the debt ceiling has caused substantial harm to the economy.
According to a new report by the President’s Council of Economic Advisers (CEA), the government shutdown and near-breach of the debt limit reduced consumer confidence and hurt consumer spending, investment and hiring.
The CEA’s Weekly Economic Index uses eight economic indicators that measure consumer spending, consumer confidence, the labor market, industrial production and the housing market. The latest index indicates that the shutdown and debt ceiling fights reduced economic growth by .25 percent of GDP through Oct. 12.
The index also points toward the loss of 120,000 jobs that otherwise would have been added. Presumably there has since been further damage from lingering effects.
This analysis underscores the hazards of further brinkmanship on the federal debt limit. Elected officials should also fulfill their responsibilities by quickly reaching agreement on a budget that funds the government for the rest of the fiscal year and begins to address the country’s longer-term fiscal challenges.
October Report from the President’s Council of Economic Advisers
Peterson Foundation’s Confidence Index Hits Record Low