United States budget deficit set to hit $897 billion

United States budget deficit set to hit $897 billion

United States budget deficit set to hit $897 billion

The longest partial government shutdown in USA history has cost the economy $3 billion-about half the amount President Donald Trump requested for his long-promised border wall, according to the Congressional Budget Office (CBO).

The longest partial U.S. government shutdown on record that ended Friday cost the U.S. economy billions of dollars as it kept a fourth of federal agencies shuttered for five weeks, the Congressional Budget Office said Monday.

The report, which was released Monday, estimated a hit of $3 billion, or 0.1 percent, to economic activity during the fourth quarter of 2018.

A partial United States government shutdown ended Friday, its 35th day.

"Among those who experienced the largest and most direct negative effects are federal workers who faced delayed compensation and private-sector entities that lost business", the report says.

President Donald Trump and Democratic and Republican congressional leaders agreed to end the shutdown and created a bipartisan panel to negotiate security provisions along the U.S. -Mexico border.

CBO had projected first-quarter growth to be an annualized 2.5 percent, but including the effect of the shutdown, it's estimated at 2.1 percent.

Overall, CBO predicts that just $3 billion in lost gross domestic product will be permanently lost, a modest figure in a $20 trillion-plus economy.

Still, it remained to be seen how lawmakers address border security before the February 15 deadline while avoiding another closure. If the president can not reach a deal with Schumer and Pelosi in the next three weeks, the government will shut down again on February 15.

While some said Trump caved by reopening the government with no border wall funding (conservative commentator Ann Coulter described Trump as a "wimp"), he insisted that the deal was "in no way a concession". Contractors and businesses that relied on federal workers' business, however, face huge losses, although some lawmakers are pushing legislation to pay contractors back as well. And from 2020-2029, the deficit is expected to average $1.2tr or about 4.4% of GDP each year.

"Underlying those effects on the overall economy are much more significant effects on individual businesses and workers", the report said.

The CBO cautioned that its estimates do not incorporate other indirect negative effects, which are more hard to quantify "but were probably becoming more significant". "Some of those private-sector entities will never recoup that lost income".

The report lands in a divided Washington, where neither Trump nor Democrats controlling the House are expected to make curbing the deficit a priority.

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