Washington’s budget battle could result in a $24 billion hit to the U.S. economy.
That estimate comes courtesy of ratings firm Standard & Poor’s, who you’ll remember stripped the U.S. of its pristine credit rating in the summer of 2011 during the previous major debt-ceiling spat.
This time around, S&P says the 16-day partial-government shutdown and the wrangling over the debt limit has taken an even bigger hit to the economy. S&P estimates the shutdown shaved at least 0.6% off fourth-quarter GDP growth.
“The bottom line is the government shutdown has hurt the U.S. economy,” S&P says. “In September, we expected 3% annualized growth in the fourth quarter because we thought politicians would have learned from 2011 and taken steps to avoid things like a government shutdown and the possibility of a sovereign default.
“Since our forecast didn’t hold, we now have to lower our fourth-quarter growth estimate to closer to 2%.”
It’s hard to wrap your head around how much $24 billion really is. Here at MoneyBeat, we’ll give it a shot: $24 billion is roughly the value of the deal to take Dell Inc. private. It’s about $1 billion more than the amount J.P. Morgan set aside to cover legal expenses. And it’s about $1 billion more than GoogleGOOG +2.42% founder Larry Page‘s personal net worth, who sits as the 20th richest person in the world, according to Forbes.
In a press conference, President Barack Obama just called the budget battle a “self-inflicted wound.”
That’s one expensive wound.