White House economic adviser says damage to economy from shutdown is a 'little bit worse' than predicted

Posted at 9:01 AM, Jan 16, 2019

White House economic adviser Kevin Hassett said Tuesday that the negative impact on the United States' economic growth from the partial government shutdown will be worse than anticipated.

Hassett discussed the consequences of the shutdown, which is in its fourth week, with Fox Business Network's Melissa Francis on "After the Bell."

"Does that sound right? 1.7% for the quarter?" Francis asked of the estimated GDP growth for the first quarter of the year.

"Right. So what happens is that when the Bureau of Economic Analysis, when they calculate GDP, what they do is they basically have to estimate how much the government produces, and their estimate of how much the government produces is based on just government workers going to work and getting paid," Hassett replied.

"And so if government workers don't go to work, then they reduce their output calculations accordingly. We made an early estimate right at the beginning of the crisis that was a little bit lower than the estimate you just cited and have been studying hard as this has gone on and have found that actually the damage is a little bit worse because of government contractors, something that was excluded from our first analysis."

Hassett did not provide additional details about the estimates.

Hassett's comments come as both he and the White House are facing increased scrutiny over the shutdown. Last week, he said in an interview on PBS' "NewsHour" that furloughed federal workers who are not getting paid during the shutdown are "better off" because they didn't have to use vacation days around the holidays.