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White House Says Shutdown Trims 0.1 Percent From GDP Every Two Weeks - ABI

The ongoing partial government shutdown will cut U.S. economic output by about 0.1 percent every two weeks, the chairman of the White House Council of Economic Advisers said, Bloomberg News reported. “Our estimate is that GDP in the first quarter could go down by about a tenth if this were to resolve in the next few weeks,” CEA Chairman Kevin Hassett said yesterday. While it wasn’t immediately clear whether Hassett was referring to the level of GDP or the annualized pace of growth, his estimate appears to be broadly in line with those from private forecasters. Earlier this week, Macroeconomic Advisers by IHS Markit lowered its forecasts for fourth-quarter and first-quarter growth each by 0.1 percentage point on the assumption the shutdown will last for three weeks. JPMorgan Chase & Co. analysts estimated that each week of the shutdown will reduce GDP growth by about 0.1 to 0.2 percentage point, and the drag should mostly reverse once the government fully reopens.

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