Money for nothing: Government shutdown costs $12.5 million per hour

The government shutdown, furloughing hundreds of thousands of federal workers, could take its toll on the economy the longer it lasts. According to one estimate, it's costing taxpayers $300 million a day, to start.
LARRY DOWNING / Reuters
The government shutdown, furloughing hundreds of thousands of federal workers, could take its toll on the economy the longer it lasts. According to one estimate, it's costing taxpayers $300 million a day, to start.

Here's the price tag for the first government shutdown in 17 years: about $1.6 billion a week, $300 million a day, or $12.5 million an hour.

That estimate, from economic consulting firm IHS Global Insight, covers just the cost in work and services the government is unable to perform as it furloughs 800,000 federal workers. According to IHS, pay for federal employees is considered part of the Gross Domestic Product, which is the total value of all goods and services produced in the nation each year. So no pay for the workers means no contribution to U.S. economic output.

The furloughed workers likely will get back pay when they return to work, as they did the last time Washington shut down. But for now, they are not performing the government's work, except for essential personnel. 

"Although $300 million per day sounds like a big number, it is only a couple of thousandths of a percent of the total GDP," of about $16 trillion, said Paul Edelstein, director of financial economics at IHS.

Whether that will have an impact on the U.S. economy in the longer term, is less clear. President Barack Obama said in a statement from the White House Rose... that the longer the shutdown goes on, the more dire the consequences will be for the economy.

And some experts agree. "The economy is already weakened by continued high unemployment, as well as underemployment, which both impact consumers’ spending power," said John Challenger, chief executive officer of global outplacement consultancy Challenger, Gray & Christmas, Inc.

(Read more: #Dear Congress, 'You shouldn't be getting paid.' Americans sound off)

"Now, the government is basically shooting the economy in the foot, hobbling millions of other consumers," he said. "And the timing couldn’t be worse, as we are just weeks away from the all-important holiday season, when retailers and other businesses benefit from increased spending."

According to IHS, during the 1995-96 government shutdown, roughly 36 percent of the 2.2 million federal civilian non-postal workers were furloughed. If that same proportion was applied to the current 2.15 million workers, about 774,000 would be furloughed.

Assuming an average annual salary per employee of $110,000, this would result in a loss of $1.6 billion in GDP for one week, or roughly $300 million per day based on a five-day work week. Such a loss would also reduce the fourth-quarter economic growth rate by 0.16 of a percentage point.

GDP would still grow by around 2 percent in the fourth quarter, so a short-term shutdown would not materially affect economic growth, IHS said in a research note.

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