How much damage was inflicted on the economy? That’s the million-dollar question as a 16-day partial government shutdown draws to an end and a crippling debt default apparently was averted.
The economy already was slowing ahead of the debacle in Washington, and for more than half of October, there’s been no official government data on which to gauge the health of the economy.
“It feels like things have gone a bit soft, but we really don’t have the hard data to know to what degree that happened,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics.
There’s plenty of anecdotal evidence, though, that harm has been done.
One gauge came Wednesday from the Investment Company Institute, which reported that for the week ending Oct. 9, investors had pulled about $3.1 billion out of mutual funds composed of stocks and another $2.6 billion fled these funds made up of bonds.
More evidence came in the recent Economic Confidence Index, published regularly by Gallup. The reading for the three-day period that ended Oct. 3 had fallen 12 points in less than a week. That caught the attention of the National Retail Federation, whose members hire in big numbers.
“Only the collapse of Lehman Brothers in September 2008 has done more damage to consumer confidence in such a short period of time,” the retail federation said Oct. 9 in a statement. “Retailers represent the sector of the American economy that is most closely tied to consumer attitudes, and these numbers are deeply concerning.”
A week later, the confidence reading had fallen another 5 points.
Gallup’s numbers in August 2011, the last debt-ceiling battle, showed sharp drops in confidence that later translated into lower retail sales and economic deterioration.
This year’s uncertainty follows a drag on growth that began early this year with the end of a holiday on payroll taxes and continued with reduced federal spending, especially defense spending.
Economists think that these factors and political squabbling will combine to shave about 1.5 percentage points off what the nation’s growth rate otherwise would have been in 2013.
“I don’t think it has undermined the recovery . . . but it certainly is going to take a bite out of growth,” Zandi said. “Brinksmanship just adds to the weight of fiscal policy on the economy.”
Wells Fargo Securities in Charlotte, N.C., estimates that the shutdown will lop off no more than half a percentage point of growth over the final three months of this year.
“The primary reason for the minimal economic impact during this shutdown stems from the fact that most of the negative effects and the subsequent positive bounce-back effects are currently expected to be contained within the same quarter of growth,” John Silvia, the group’s chief economist, wrote Wednesday.
Economists are looking carefully at same-store sales and similar retail data to gauge how much the sap in confidence will affect holiday sales.
Some of what will be offered to consumers already may be scaled back, thanks to the government shutdown. The Federal Communications Commission has been closed almost completely, halting the certification process for a range of electronics products planned for sale soon.
“In the United States, virtually all electronic devices must receive FCC equipment certification prior to sale. Every cellphone. Every television. Every computer. Each device emits a unique radio-frequency signature, and the FCC reviews this signature to limit the potential for harmful interference to other devices,” said an alert Oct. 9 from the international law firm Hogan Lovells.
The agency already had approved certain widely anticipated devices, such as the iPad 5 and the iPad Mini 2. But others are awaiting approval for sale in the United States.
“Even upon the resumption of operations, moreover, the backlog of equipment certifications has the potential to delay important consumer product launches from manufacturers such as Google, Apple, Samsung, HTC and LG, as well as from smaller manufacturers who seek to deploy innovative equipment for medical, industrial and scientific use,” Hogan Lovells said.
Customs and Coast Guard officials were largely on the job as essential workers during the shutdown, so seaports didn’t suffer backlogs and imported consumer goods continue to arrive from China.
“Generally, what we’re hearing is the impact has been slim to minimal,” said Phillip Sanfield, a spokesman for the bustling Port of Los Angeles.
Up the coast in Washington state, the story was similar at the Port of Tacoma.
“At this point, we haven’t seen any significant effect from the government shutdown,” spokeswoman Tara Mattina said.
But some port projects might be affected, she cautioned, if requests for permits don’t get attention soon.
Still unclear is when and whether the Labor Department will release closely followed data on jobs and inflation. The jobs numbers and the unemployment rate for September are now almost two weeks late.
And this week is a crucial one for the data collection necessary to determine October’s unemployment rate, due to be reported Nov.1. Because of the shutdown, no one is out collecting the information for October reports.
“I wouldn’t be surprised if they delayed it until Nov. 8,” said Keith Hall, who ran the Bureau of Labor Statistics from 2008 to 2012.
For the Consumer Price Index, the Labor Department’s gauge of inflation, data must be collected throughout the month.
“Their sample has got to be less than half of what they’d normally collect in the month,” Hall said, adding that the Labor Department has “got to decide if they’re going to release the data (at all) for October’s CPI.”