WASHINGTON, D.C. – U.S. Senator Amy Klobuchar (D-MN), Vice Chair of the U.S. Congress Joint Economic Committee (JEC), today released a report analyzing the economic fallout of the federal government shutdown that began on October 1st. Klobuchar’s report shows that the shutdown has created significant economic headwinds for the U.S. economy, threatening the recovering housing market, the tourism sector, small business lending and agriculture while generating more uncertainty regarding the ongoing debt ceiling debate.
“Shutting down the government hurts virtually all aspects of our economy, from the housing market to small businesses to tourism to agriculture,” Klobuchar said. “It’s time to stop the political gamesmanship and pass a straightforward bill that gets the government back to work so we can focus on real solutions to move America forward.”
According to Klobuchar’s report, small businesses are already feeling the pinch of the shutdown. With the approval process for new loans backed by the Small Business Administration (SBA) now at a standstill, small businesses could face crippling delays in accessing affordable capital. Klobuchar’s report also suggests the shutdown could severely restrict the budding recovery in the housing market, as thousands of potential buyers are prevented from getting mortgages insured by the Federal Housing Administration (FHA) and the Department of Veterans’ Affairs (VA).
The shutdown has also negatively impacted the U.S. tourism industry, forcing the closure of the National Parks System which generated roughly $15 billion in direct and indirect spending in 2011. For America’s agriculture sector, the shutdown has meant a suspension of funding for new export promotion programs at the U.S. Department of Agriculture, as well as a lapse in the release of key data impacting market values for corn, soybeans, wheat and cotton.
According to Klobuchar’s report, the shutdown has also shaken market confidence in Congress’s ability to prevent a debt ceiling default before the October 17 deadline. Klobuchar recently released a report outlining the economic consequences of debt ceiling brinkmanship. The report notes that brinkmanship over the debt ceiling in 2011 resulted in a downgrade of the U.S. credit rating, a 2,000 point drop in the Dow Jones Industrial Average and an added $1.3 billion in taxpayer-funded borrowing costs for the U.S. Treasury in 2011 alone. Bringing the country to the brink of default in 2013 could have similar, if not worse, consequences for the economy.
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