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Rick Moran


November 9, 2013 - 6:43 am
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The White House is making some startling claims about the government shutdown’s cost to the economy.

Essentially, evil Republicans have sabotaged growth and cost tens of thousands of jobs:

October’s 16-day government shutdown will cut into fourth-quarter GDP growth by 0.2 to 0.6 percentage points, according to a report released Thursday from the White House Office of Management and Budget. That hit to GDP is in line with many economists’ estimates. The shutdown also meant 120,000 fewer private-sector jobs created in the first two weeks of October.

If those projections are correct, it could mean the shutdown delivered a meaningful blow to the national economy. Third-quarter GDP growth was at 2.8 percent, the Commerce Department reported Thursday. Even if that pace holds steady through the fourth quarter, it could mean that the shutdown brought moderate economic growth down to more sluggish levels.

Likewise, a subtraction of 120,000 private-sector jobs could bring October job growth to a crawl. September’s job growth was only at 148,000, and average monthly job growth for 2013 is at roughly 178,000. However, consensus estimates for private job growth in October stand at 128,000, according to Bloomberg. More data on how the shutdown affected the October jobs numbers will come Friday morning, when the Labor Department releases the October employment report.

The White House also estimates it paid $2 billion to furloughed employees for their days off the job, and that the total compensation bill, including benefits like health insurance, came to $2.5 billion.

OMB Director Sylvia Mathews Burwell told reporters in a Thursday afternoon conference call that those estimates are “conservative.”

“It does not represent the total cost, because the other thing it does not cover is all the preparation leading up to and what happened post [shutdown],” she said.

Unfortunately for the White House, this scary report came out a day before the actual jobs numbers were released. Given that the BLS reported that 202,000 jobs were created in October, does anyone seriously believe that the shutdown cost us another 120,000 jobs for the month? That would mean that October’s “actual” numbers would have been 322,000.

For the record, the highest number of jobs created in a month during Obama’s time in office was 241,000 in April of this year.

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There was nothing of comfort in the October Jobs Report. Nearly 900,000 Americans dropped out of the jobs market completely; over 600,000 full time jobs were lost in October, and retail, temp, and hospitality jobs made up 50% of the new jobs created.

According to Credit Suisse, it's October survey of American real estate brokers, October "housing traffic" was the weakest in 2 years. Additionally, Consumer Confidence took an unexpected hit.

None of this should come as a surprise. Despite QE expanding the US's M1 money supply to $2.7 trillion, the US economy continues to under perform. The money is stuck at the M1 levels (the banks), and with good reason. Interest rates continue to slowly rise on the the T-Bills. The danger is that if this $2.7 trillion makes its way from the banks and into the general economy, inflation will spike immediately. If that occurs, the costs of borrowing for both the public and private sectors goes up, and all of the negative feed backs to our economy follow.

We are stuck. No growth, but QE continues. QE continues to finance 30 cents for every federal dollar spent, and that 30 cents continues to expand our M1 monetary base. We are so screwed.
1 year ago
1 year ago Link To Comment
MSM lets them have it both ways, as usual.
1 year ago
1 year ago Link To Comment
Men go about their work and let the results speak for themselves. Those who constantly blame others are less than manly.
1 year ago
1 year ago Link To Comment
and how do you make a web site that doesn't count the total traffic.

Guess SNL was correct, millions for a web site that got 6 people signed up the first day.

Guess that is why Amazon and Kayak are such good businesses, because they get 6 people a day. And there is a bridge to sell in brooklyn
1 year ago
1 year ago Link To Comment
This administration cannot accurately calculate the dozens of people who have actually signed up for health insurance policies using the Obamacare website.
How can we believe that they can accurately count tens of thousands of new jobs all across the country?
1 year ago
1 year ago Link To Comment
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