The Congressional Budget Office on Monday delivered its estimated economic cost of the five-week partial government shutdown: $11 billion dollars, with $3 billion in permanent economic losses.
Those numbers are now being leveraged for partisan ends on either side of the political spectrum. But even the CBO admitted that they don’t provide a full picture of the shutdown’s cost. The estimates “do not incorporate other, more indirect negative effects of the shutdown, which are more difficult to quantify but were probably becoming more significant as it continued,” the agency said.
Indeed, the ripple effects of the shutdown itself is making it harder for economists and other researchers to grasp the shutdown’s full impact. That’s in part because important information-gathering agencies were among the government offices shuttered for more than a month during the country’s longest-ever shutdown, leaving experts without vital data even now.
The Bureau of Economic Analysis (BEA), which provides official macroeconomic statistics, was closed during the shutdown. Also shuttered was the U.S. Census Bureau, depriving business leaders and policymakers of important economic indicators. (The Bureau of Labor Statistics, which among other things is responsible for releasing monthly unemployment numbers, was open.) While the shutdown is over, those agencies need time to collect and disseminate data that would’ve otherwise been handled during the closures. Those delays are having consequences for researchers, policymakers, business leaders and more.
“When you get [information] delays, you get a slowdown of policymaking decision making that depends on that information,” says Erica Groshen, the former Commissioner of the Bureau of Labor Statistics. “People were making decisions without the full information that they hoped for or expected during that time.”
While some data from the shutdown period will be delivered after a delay, other economic data routinely collected by the shuttered departments will be permanently lost, Groshen says.
Good economic data has always been important both in the private sector and government. But Steve Landefeld, former director of the BEA, says that it’s more critical today than ever before. “We’re increasingly in a world where we are especially data-driven in our monetary policy,” he says.
One especially important economic indicator is the BEA’s quarterly assessment of the Gross Domestic Product, or GDP. The BEA said Monday that the initial GDP estimates for the fourth quarter of 2018, originally scheduled for release on Jan. 30, will be delayed. It’s unclear how long we’ll go without updated GDP numbers. National Economic Director Larry Kudlow said during a press conference Monday that they will be issued in about a week, though the BEA hasn’t specified a release date.
Landefeld directed the BEA during the pronged 1996 government shutdown, and when the government reopened, his agency had to forgo releasing the advance estimate entirely. “We came back, not quite as late as this, but we had lost so much data by that point … that we weren’t going to make a bunch of assumptions,” he says.
For economists trying to make sense of mixed economic signals in the current period of strong labor markets alongside stock market upheavals, GDP numbers are essential to figuring out America’s true economic situation.
“This is a time of tremendous uncertainty,” says David Berger, an economist at Northwestern University. “The GDP numbers are some of the biggest numbers that we see to give us an indication of how the economy’s doing … we just don’t have that much idea what’s going on in terms of output.”
“We’re flying blind a little bit,” he adds. “It may take us a little while, a month, a quarter, to figure out what’s going on in the economy.”
The lack of data could make it harder for economists, journalists and others to fact-check politicians’ claims about the economy. During the shutdown, President Trump continued to tout that the economy was “doing great.” Looking at some metrics, that appears true on the surface. Employers added nearly double the expected number of jobs in December (though that was largely before the shutdown began on Dec. 22). And as the shutdown dragged on, the stock market recovered from its initial shock. But that information doesn’t offer a complete picture of the economy without other statistics that, because of the shutdown, we simply don’t have yet.
“Although BEA and Census were shut down, they left their websites running (thank goodness) and had already posted the figures we needed for GDP, corporate profits, trade deficits, and homeownership,” says Brooks Jackson, director emeritus and chief financial writer at FactCheck.org, in an email. But he adds that “getting anything more current is going to be a problem going forward, however.”
Others caution that any further shutdowns will only compound the problem.
“The fact that we have delayed statistics is going to make it harder to figure out the direct effect of the shutdown, but also more importantly what the overall state of the economy is at,” says Matthew Shapiro, an economics professor at the University of Michigan. “Until there’s a more permanent agreement on funding the government, uncertainly on policy is going to be a drag on the economy.”
For some in the economics world, the greatest loss caused by the shutdown may not be the missing or delayed information, but the damage done to the economic information collectors themselves. Agencies like the BEA have thin margins for improving their data collection efforts, and a one-month shutdown can cripple improvement efforts for a whole year. Moreover, like in other areas of government, prolonged shutdowns that furlough federal workers also make public service less appealing — especially for the highly skilled workers at agencies like the BEA, many of whom would be able to find more lucrative positions in the private sector.
“Trying to keep the best and the brightest with this going on, I don’t think it’s tenable,” says Landefeld. “There’s that long-term damage too.”
- The Case for Mediocrity
- How Russia Is Recruiting Cubans to Fight in Ukraine
- Paul Hollywood Answers All of Your Questions About The Great British Baking Show
- Meet the 2023 TIME100 Next: the Emerging Leaders Shaping the World
- Oprah and Arthur C. Brooks: How to Separate Work From Your Identity
- How Canada and India's Relationship Crumbled
- You Don’t Have to Like Wrestling to Love Netflix’s Excellent Wrestlers
- The Most Anticipated Books, Movies, TV, and Music of Fall 2023
- Want Weekly Recs on What to Watch, Read, and More? Sign Up for Worth Your Time