In a downward shift, the White House acknowledged Wednesday the partial government shutdown could stifle economic growth.
White House officials during the 33-day shutdown have tried to dismiss economists’ and congressional Democrats’ warnings that it could drag down the economy. But that changed a bit Wednesday, just as President Donald Trump gears up for a re-election campaign that he wants to focus, in part, on what he says is a roaring economy with low unemployment.
If a quarter of the federal government remains closed through April, the U.S. economy could hit a zero growth rate, White House Council of Economic Advisers Chairman Kevin Hassett.
“If [the shutdown] extended for the whole quarter, and given the fact that the first quarter tends to be low because of residual seasonality, then you could end up with a number very close to zero in the first quarter,” Kevin Hassett told CNN. When asked if GDP growth could be zero in the current quarter, he replied: “Yes, we could.”
But even with slower than anticipated growth, Hassett predicted “humongous” growth numbers in subsequent quarters of 2019, “if the government reopened.”
White House chief economic official Lawrence Kudlow has recently described the U.S. economy as “strong,” and predicted a 3 percent growth rate for the first quarter.
Kudlow gaggled with reporters Tuesday in the seldom used White House briefing room, describing the state of the U.S. economy and its growth rate in recent months as “as good as anything we’ve seen for several decades.”
He added he is “not at all concerned” about the partial government shutdown dragging it into a slowdown that some economists say already is underway.
He also contended he understands the “hardship” that many furloughed federal workers are feeling as they will not get paychecks again Friday.
The Senate scheduled votes on spending legislation that would end the shutdown for Thursday — beyond a midnight Tuesday deadline for those checks to go out.
“You know, I don’t want to belittle it. No one likes the hardship that people are having to shoulder, including myself. I have young people on my staff who are concerned, so I get that,” Kudlow said.
“I don’t want to dance away from that. But I will also say, we are predominantly not a government-run economy. We’re a free market economy,” he added. “So when the government re-opens — and I’m not here to negotiate — I’m not going to make a prediction, that’s up to the president — you will see an immediate snapback.”