The U.S. Congressional Budget Office (CBO) estimates that the country will not recover between $7 billion and $14 billion in real GDP losses by 2025, according to a letter from the CBO’s director, Phillip Swagel, to House Budget Committee Chairman Jodey Arrington.
The non-payment of federal employee salaries and the suspension of certain subsidies could reduce GDP by one to two percentage points by the end of this year.
While the CBO expects a partial recovery after the government reopens, the shutdown of numerous federal agencies since October 1 is significantly impacting the economy.
The CBO warns that losses will worsen as the government shutdown, now in its 29th day, continues.
If the government reopens this week, the U.S. economy is projected to lose $7 billion compared to potential gains.
Should the shutdown extend into next week, becoming the sixth longest in history, losses will reach $11 billion, and if it lasts until the end of November, the deficit will hit $14 billion.
Democrats refuse to approve the Republican budget in the Senate unless negotiations for an extension of Obamacare subsidies are agreed upon.
Republicans maintain they will not negotiate until Democrats first approve the federal budget, aiming to end the government shutdown.
