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US govt shutdown cost 120,000 jobs, says White House
WASHINGTON - The partial government shutdown this month trimmed 0.25 percentage point from fourth-quarter economic growth and cost the United States 120,000 jobs, said President Barack Obama's chief economic adviser.
An analysis of daily and weekly economic data through Oct 12 showed weakness in areas such as retail sales, economic confidence and mortgage applications, some of which was directly related to the 16-day shutdown, Mr Jason Furman, head of the Council of Economic Advisers, said at a White House briefing on Tuesday.
The administration released a report on the council's findings on the same day a separate Labour Department report showed that Job growth had slowed last month.
The White House may use the projections to bolster its bargaining position as talks get under way with Congress to meet a December deadline for a revenue and spending plan.
The White House figures "may prove to be a little bit conservative", said Mr Russell Price, senior economist at Ameriprise Financial Inc. He forecast that the shutdown would shave as much as 0.5 percentage point from fourth-quarter gross domestic product.
Attempts to estimate the impact of the shutdown are difficult because most economic data reported by the government was delayed by the shutdown.
To make up for the lack of data, White House economists created an index of eight economic variables, including weekly claims for jobless benefits, which continued to be reported during the shutdown, as well as private data on retail sales, consumer confidence, steel production and mortgage applications.
The index "fell very sharply in the first 12 days of October", Mr Furman said.
Private economists will also be forced for some time to come up with new ways to gauge the US economy's strength.
Unlike the delayed job data released on Tuesday, experts said figures for unemployment and job creation in October and November will be skewed as hundreds of thousands of government workers and contractors disappear from the workforce and then reappear in next month's survey.
That lack of data will have real-world ramifications.
One reason the Fed is likely to wait until early next year to being easing back on stimulus efforts is that policy-makers simply will not know if the labour market is gaining or losing strength before then. Not until December will the monthly job survey be free of the shutdown static, and that report does not come out until early January.
The September job report was disappointing, with the economy adding 148,000 new jobs instead of the expected 185,000, but stocks rose on anticipation that Fed stimulus efforts would continue well into next year.
The Fed's purchase of US$85 billion in bonds a month has buoyed Wall Street this year, because the flood of stimulus money makes riskier assets more appealing while keeping interest rates low and reducing borrowing costs.
The benchmark Standard & Poor's 500 index is up more than 23 per cent so far this year.
BLOOMBERG, NEW YORK TIMES
WASHINGTON - The partial government shutdown this month trimmed 0.25 percentage point from fourth-quarter economic growth and cost the United States 120,000 jobs, said President Barack Obama's chief economic adviser.
An analysis of daily and weekly economic data through Oct 12 showed weakness in areas such as retail sales, economic confidence and mortgage applications, some of which was directly related to the 16-day shutdown, Mr Jason Furman, head of the Council of Economic Advisers, said at a White House briefing on Tuesday.
The administration released a report on the council's findings on the same day a separate Labour Department report showed that Job growth had slowed last month.
The White House may use the projections to bolster its bargaining position as talks get under way with Congress to meet a December deadline for a revenue and spending plan.
The White House figures "may prove to be a little bit conservative", said Mr Russell Price, senior economist at Ameriprise Financial Inc. He forecast that the shutdown would shave as much as 0.5 percentage point from fourth-quarter gross domestic product.
Attempts to estimate the impact of the shutdown are difficult because most economic data reported by the government was delayed by the shutdown.
To make up for the lack of data, White House economists created an index of eight economic variables, including weekly claims for jobless benefits, which continued to be reported during the shutdown, as well as private data on retail sales, consumer confidence, steel production and mortgage applications.
The index "fell very sharply in the first 12 days of October", Mr Furman said.
Private economists will also be forced for some time to come up with new ways to gauge the US economy's strength.
Unlike the delayed job data released on Tuesday, experts said figures for unemployment and job creation in October and November will be skewed as hundreds of thousands of government workers and contractors disappear from the workforce and then reappear in next month's survey.
That lack of data will have real-world ramifications.
One reason the Fed is likely to wait until early next year to being easing back on stimulus efforts is that policy-makers simply will not know if the labour market is gaining or losing strength before then. Not until December will the monthly job survey be free of the shutdown static, and that report does not come out until early January.
The September job report was disappointing, with the economy adding 148,000 new jobs instead of the expected 185,000, but stocks rose on anticipation that Fed stimulus efforts would continue well into next year.
The Fed's purchase of US$85 billion in bonds a month has buoyed Wall Street this year, because the flood of stimulus money makes riskier assets more appealing while keeping interest rates low and reducing borrowing costs.
The benchmark Standard & Poor's 500 index is up more than 23 per cent so far this year.
BLOOMBERG, NEW YORK TIMES
