NEW YORK, Jan 19, 2019 (BSS/AFP) – The shutdown of the US government —
now in its record 28th day — is becoming a drag on economic growth, the
president of the New York Federal Reserve Bank said Friday.
John Williams, who also holds the influential vice chairmanship of the
Federal Reserve’s policy committee, reportedly told a gathering the
government work stoppage could shave as much as a full percentage point off
GDP growth in the first quarter.
In an address delivered to a New Jersey banking association, Williams said
the shutdown was among “emerging headwinds to growth,” according to his
prepared remarks.
He went on to estimate that the shutdown would reduce GDP growth by half a
percentage point, “maybe even a percentage point if it continues,” but said
that a rebound would come when it ends, according to Bloomberg.
Economists say that beyond lost pay for federal workers, the shutdown is
impeding economic activity in systemic ways, interrupting the issuance of
permits, data collection, regulatory approvals, contract payment and the
payment of aid and loans in various sectors such as agriculture.
The International Monetary Fund on Thursday warned that the shutdown’s
effect will worsen as it drags on.
Different estimates have put the losses at between 0.05 and 0.1 percentage
point for each week the shutdown persists.
Last month, the Federal Reserve forecast 2.3 percent growth for 2019,
markedly slower than 2018.