S&P: Shutdown cost economy at least $24B

The government shutdown cost the nation’s economy at least $24 billion and shaved 0.6 percent off the nation’s economic growth, according to new analysis from Standard & Poor’s.

With a deal seemingly headed for the finish line, the credit rater analyzed the impact the 16-day shutdown of the federal government has posed on the economy — and the results weren’t pretty.

“The bottom line is the government shutdown has hurt the U.S. economy,” the firm said.

{mosads} S&P noted that the current compromise only funds the government through Jan. 15 and allows the government to keep borrowing funds until Feb. 7. That means the same economic woes that this most recent fight inflicted will be a threat again in relatively short order. In fact, S&P warned that consumers could have a hard time regaining their momentum during that relatively short window, especially with a holiday shopping season critical to the U.S. economy on the way.

“The short turnaround for politicians to negotiate some sort of lasting deal will likely weigh on consumer confidence, especially among government workers that were furloughed,” the agency said. “If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they’ll remain afraid to open up their checkbooks. That points to another Humbug holiday season.”

While it appears Congress will be able to stave off a default, S&P also warned that while the shutdown took its toll, a default on U.S. debt would be a catastrophe. A failure for the nation to pay interest on its debt could cut as much as 4 percent out of the U.S. economy, thrusting the nation into a recession that would wipe out nearly all economic gains made since the 2008 financial meltdown.