Washington, Oct 17: As hundreds of thousands of furloughed federal employees started returning to work, President Barack Obama said the 16-day government shutdown and the threat of US debt default “inflicted completely unnecessary damage (to) our economy”.
The standoff between the Democrats and Republicans over the opposition’s attempt to derail his signature healthcare law nicknamed Obamacare, slowed the economy’s growth and set back employers’ plans to hire, he said Thursday morning at the White House.
“America is the bedrock of the global economy for a reason … because we keep our word and we (meet) our obligations,” Obama said observing: “Just the threat of default … increased our borrowing costs, which adds to our deficit.”
“We’ll bounce back from this,” Obama said. But the way business is done in Washington has to change to make a positive difference in the economy, he said suggesting taking a balanced approach to a responsible budget.
Congress should “cut out things we don’t need,” “close corporate tax loopholes that don’t create jobs,” and “free up resources for things that do help the country grow,” like research and infrastructure, he said.
Meanwhile, according to an initial analysis from Standard & Poor’s, the 16-day government shutdown took a $24 billion chunk out of the US economy,
As a result, the rating agency projects that the US economy will grow 2.4 percent in the fourth quarter – as opposed to the roughly 3 percent growth rate predicted prior to the shutdown.
“Because it’s happening all at once, so quick, so fast, unplanned; it’s going to hurt,” Beth Ann Bovino, US chief economist at S&P was quoted as saying by CNN. “We can absorb it, but it still hurts.”
Besides hundreds of thousands of federal workers furloughed, shutdown hit small businesses hard due to frozen government contracts and stalled business loans. Closed national parks also hit the tourism industry.
The debt fix is also only temporary, which could continue to fuel economic uncertainty, hurting consumer confidence and slowing hiring, said Mark Zandi, chief economist for Moody’s Analytics.
(Arun Kumar can be contacted at firstname.lastname@example.org)