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Economic Toll Mounts as Federal Shutdown Enters Third Week
Treasury Secretary Scott Bessent revealed Wednesday that the ongoing federal government shutdown is costing the U.S. economy approximately $15 billion daily in lost output, putting a staggering figure on the economic damage as the political standoff enters its third week. Speaking at a Washington news conference, Bessent emphasized the shutdown is beginning to “cut into muscle” of the American economy and urged Democrats to cooperate with Republicans to end the impasse. The latest analysis of the shutdown’s economic impact confirms the severe consequences for businesses and consumers nationwide.
“We believe that the shutdown may start costing the U.S. economy up to $15 billion a day,” Bessent stated, marking the first official quantification of the shutdown’s economic toll. The Treasury Secretary noted that while investment flows into the U.S. economy, particularly in emerging sectors like artificial intelligence, remain sustainable and are “only getting started,” the government shutdown has become an increasingly significant impediment to economic growth.
Investment Boom Threatened by Political Gridlock
During a CNBC event held alongside the International Monetary Fund and World Bank annual meetings in Washington, Bessent highlighted the contrast between the thriving private sector and government dysfunction. “There is pent-up demand, but then President Trump has unleashed this boom with his policies,” he said. “The only thing slowing us down here is this government shutdown.”
The Treasury Secretary expressed confidence that incentives in the Republican tax law and the administration’s tariff policies would sustain the investment surge and fuel continued economic expansion. Bessent drew historical parallels, suggesting the current period could mirror transformative economic eras. “I think we can be in a period like the late 1800s when railroads came in, like the 1990s when we got the internet and office tech boom,” he remarked. This optimism comes amid significant corporate investment movements in the technology sector, demonstrating continued private sector confidence despite government instability.
Deficit Shows Improvement Amid Economic Uncertainty
In a positive economic note, Bessent announced that the U.S. deficit for fiscal year 2025 ended September 30 was smaller than the $1.833 trillion deficit recorded in the previous fiscal year. While not providing specific figures ahead of the Treasury Department’s official report, he indicated that the deficit-to-GDP ratio could decline to the 3% range in coming years.
“The deficit-to-GDP, which is the important number, now has a five in front of it,” Bessent disclosed at the CNBC event. When questioned about achieving a ratio beginning with three, he responded, “Yes, it’s still possible,” adding that the ratio would improve if the United States could “grow more, spend less, and constrain spending.”
These deficit improvements occur alongside major technological advancements from leading American companies that continue to drive economic productivity, even as government operations remain stalled.
Contrasting Economic Indicators Emerge
The Congressional Budget Office estimated last week that the U.S. fiscal 2025 deficit decreased only slightly to $1.817 trillion, despite a substantial $118 billion increase in customs revenue resulting from the administration’s tariff policies. This modest improvement highlights the complex fiscal landscape facing policymakers once the government reopens.
The shutdown’s economic impact extends beyond immediate output losses, affecting everything from national security operations and international relations to small business lending and federal contracting. Meanwhile, private sector innovation continues, with companies increasingly adopting advanced cybersecurity measures to protect their operations during periods of government instability.
As the shutdown persists, economists warn that the cumulative economic damage could undermine the very growth that Bessent cited as crucial for long-term deficit reduction. The Treasury Secretary’s stark warning about the $15 billion daily cost underscores the urgency of resolving the political standoff before permanent economic damage occurs.
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