Obama Economic Adviser Furman Says Shutdown Cost 120,000 Jobs

Tuesday, 22 Oct 2013 03:17 PM

 

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The 16-day partial government shutdown this month trimmed fourth quarter economic growth and meant 120,000 fewer U.S. jobs were created in October, President Barack Obama’s chief economic adviser said.

An analysis of daily and weekly economic data through Oct. 12 such as sales growth, economic confidence and mortgage applications fell and some of the declines are directly related to the shutdown, said Jason Furman, head of the Council of Economic Advisers.

The White House concluded that the shutdown and uncertainty over whether the U.S. would default had a major impact on job creation, he said. The U.S. this year has had an average monthly job growth of 182,000.

“This all just really underscores how unnecessary and harmful the shutdown and the brinksmanship was for the economy, why it’s important to avoid repeating it,” Furman said at a White House briefing.

Last week’s deal to end the shutdown and avert the threat of a U.S. default followed a stalemate that began when House Republicans tried to force a delay in the Affordable Care Act, Obama’s signature health-care law. The accord sets a Dec. 13 date for completing the budget talks that opened yesterday. It funds government operations through Jan. 15 and suspends the debt limit through Feb. 7.

‘Clear Story’

An index of eight economic variables compiled by White House economists shows “that it fell very sharply in the first 12 days of October,” Furman said. Private forecasts show economic growth in the fourth quarter will be 0.2 to 0.6 percentage point lower than was predicted before the shutdown.

The impact of that standoff is “a clear story” told through private-sector forecasts and data, Furman said. “It was a significant and unnecessary self-inflicted wound that we shouldn’t be repeating,” he said.

Because the data is only for the first 12 days of the month, the conclusions may change when figures from the rest of the month come in, Furman said.

Heading into the shutdown, employers in the U.S. added fewer workers to payrolls than projected in September, Labor Department figures released separately showed today.

The 148,000 increase followed a revised 193,000 gain in August that was larger than initially estimated, the data showed. The unemployment rate fell to 7.2 percent, the lowest level since November 2008.

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