United States Treasury Secretary Scott Bessent said the two-week federal government shutdown is costing the U.S. economy around US$15 billion (A$23.03 billion) a week in lost output.
During the news conference, Bessent said the shutdown was beginning to “cut into muscle” of the U.S. economy and urged Democrats to “be heroes” and side with Republicans to end it.
Analysts have projected a hit to quarterly growth of roughly 0.2% points per week, which would amount to around US$15 billion, and much of it would be made up after the shutdown ends when federal workers typically receive payback.
However, this shutdown of the Trump administration is threatening unprecedented action like denying backpay and permanent firings.
Recently, a federal judge in San Francisco ordered the Trump administration to halt its efforts to lay off roughly 4,100 federal workers after President Donald Trump threatened 10,000 layoffs during the shutdown.
The S&P Global Market estimated that the unemployment rate could rise to as much as 4.8% if the shutdown continues until 18 October, which would be a significant jump from 4.3%.
The White House Council of Economic Advisers also estimated that a month-long shutdown could lead to the loss of US$30 billion in consumer spending. This is in part due to the millions of government contractors who aren’t eligible for back pay if their work is affected.
Despite this, Bessent said the U.S. deficit has shrunk for the 2025 fiscal year ending 30 September to an amount smaller than the US$1.83 trillion posted in the prior fiscal year.
While not providing a figure, Bessent suggested that the deficit-to-GDP ratio could come down to the 3% range in the coming years.
The Treasury Department has not yet reported the annual deficit figure.
