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POLITICS: PennAve

Obama economic advisers: Shutdown will cost the economy 120,000 private-sector jobs in October

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Jobs,Debt Ceiling,PennAve,Joseph Lawler,Economy,Government Shutdown,Unemployment

White House economic advisers have assessed the economic damage caused by the congressional showdown over funding the government and raising the debt ceiling at 120,000 private-sector jobs in October.

In a report released Tuesday, the Council of Economic Advisers estimated that the shutdown and what they called political "brinksmanship" over raising the debt limit will result in a 0.25 percentage point reduction in the annualized gross domestic product growth rate in the fourth quarter and a loss of 120,000 private-sector jobs in the first two weeks of October.

Other private companies have estimated that the congressional standoff reduced annualized economic growth between 0.2 and 0.6 percentage points in the fourth quarter.

Those findings, however, were based on the loss of government spending during the shutdown, and not on the broader impact of the shutdown.

The CEA's estimate, by contrast, was calculated by constructing an index of economic indicators, including measures of retail sales, consumer confidence, labor market activity, steel production and mortgage applications.

The CEA compared the changes in its index relative to a previous month that didn't have a shutdown or debt limit fight, and used the difference in the index to estimate what happened to the economy as a whole.

One of the members of the CEA, James Stock, was a professor at Harvard before joining the White House, and is considered a leading macroeconomic forecaster.

The report, particularly detailed and math-heavy for a document released to the public, represents another effort by the White House to discourage further political crises relating to budgetary matters. The legislation President Obama signed to end the shutdown and raise the debt ceiling funds the government only through mid-January, and only authorizes enough new debt issuance to keep the government under the limit through early spring.

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