From the fiscal cliff to sequestration to the current shutdown debt ceiling debate: What's the cost of the U.S. government careening from crisis to crisis?
About 900,000 jobs lost ... and the potential for another recession.
That's the conclusion of a new report prepared by research firm Macroeconomic Advisers for the Peter G. Peterson Foundation.
The report examines the macroeconomic effects of the various political battles between Congress and the White House over the last few years. It concludes that the resulting "fiscal drag, in combination with heightened fiscal uncertainty, has slowed the annualized rate of growth in the nation's gross domestic product by as much as 1 percentage point since 2010."
In addition, the report concludes that crisis-driven government and the resulting fiscal policy uncertainty has directly harmed the U.S. economy by increasing the unemployment rate by 0.6 percent, or the equivalent of 900,000 jobs.
The report seems to quantify what many executives and economists have argued in the last few weeks: that the inability of Congress and the White House to come to terms on budget and debt issues creates uncertainty that discourages investment and ultimately hurts the national economy.
"And while the government shutdown is, for now, more economic inconvenience than catastrophe, the consequences stemming from the failure to increase the debt ceiling could cause the next recession, even if the U.S. does not default on its debt," the report warned.
The entire report is available here.
The Peterson foundation was established by billionaire Peter G. Peterson, founder of the Blackstone Group and a commerce secretary under then-President Richard Nixon, to promote awareness of fiscal issues.
First published October 14 2013, 10:35 AM