The two-week-old U.S. government shutdown is beginning to bite, with the Treasury Department estimating a hit of up to $15 billion per week in lost economic output. The clarification came late Wednesday, after Treasury Secretary Scott Bessent mistakenly stated the figure as $15 billion per day during earlier public appearances.
Speaking at the IMF and World Bank annual meetings in Washington, Bessent warned that the shutdown was starting to “cut into muscle” of the U.S. economy, even as he maintained that President Donald Trump’s economic policies had unleashed a powerful investment boom particularly in artificial intelligence and manufacturing. The estimate was based on a report from the White House Council of Economic Advisers, underscoring the growing fiscal and economic risks if the political standoff drags on.
Why It Matters:
The shutdown’s escalating costs threaten to undermine a strong investment cycle driven by tax incentives and tariffs that Bessent compared to past industrial booms. A prolonged halt could derail momentum in key growth sectors, delay federal contracts, and erode business confidence all while deepening political divisions in Washington. The Treasury’s correction also reflects tensions within the administration, as officials struggle to manage the economic fallout while maintaining optimism about Trump’s economic agenda.
U.S. Businesses and Workers: Facing disruptions in federal services, contracting delays, and uncertainty that could chill hiring and investment.
Treasury Secretary Scott Bessent: Under scrutiny for his earlier misstatement, but using the crisis to pressure Democrats to support a Republican-backed budget resolution.
Congressional Lawmakers: Locked in partisan deadlock, with Democrats resisting further spending cuts and Republicans pushing fiscal restraint.
Financial Markets: Watching closely as economic data risks distortion from the shutdown, affecting forecasts and investor sentiment.
President Donald Trump: Balancing political leverage over the budget impasse against the risk of eroding confidence in his economic stewardship.
Future Outlook:
If the shutdown persists, analysts warn that its weekly $15 billion drag could snowball into a more severe slowdown by November, potentially cutting quarterly GDP growth by up to 0.3 percentage points. Bessent suggested that the U.S. could still reduce its deficit-to-GDP ratio to around 3% in coming years if growth holds steady and spending is curbed but with Washington gridlocked, that fiscal goal appears increasingly fragile. For now, America’s investment boom stands in uneasy tension with a self-inflicted political freeze that threatens to dull its own economic momentum.
With information from Reuters.
