The two-week-old federal government shutdown may cost the US economy as much as $15 billion a week in lost output, a Treasury official said last night, correcting an earlier statement from Treasury Secretary Scott Bessent that put the cost at up to $15 billion a day.
Mr Bessent used the incorrect estimate in two separate appearances earlier yesterday, while urging Democrats to "be heroes" and side with Republicans to end it.
A Treasury official said the cost estimate was based on a report by the White House Council of Economic Advisers.
Mr Bessent told a news conference that the shutdown was starting to "cut into muscle" of the US economy.
The wave of investment into the US economy, including into artificial intelligence, is sustainable and is only getting started, but the federal government shutdown is increasingly an impediment, Mr Bessent said.
"There is pent-up demand, but then President (Donald) Trump has unleashed this boom with his policies," Mr Bessent said at a CNBC event held on the sidelines of the International Monetary Fund and World Bank annual meetings in Washington.
"The only thing slowing us down here is this government shutdown," Mr Bessent said.
He said that incentives in the Republican tax law and Trump's tariffs would keep the investment boom going and fuel continued growth.
"I think we can be in a period like the late 1800s when railroads came in, like the 1990s when we got the internet and office tech boom," Mr Bessent said.
Mr Bessent also said that the US deficit for the 2025 fiscal year ended September 30 was smaller than the $1.833 trillion deficit posted in the prior fiscal year. He did not provide a figure, but said that the deficit-to-GDP ratio could come down to the 3% range in coming years.
The Treasury Department has not yet reported the annual deficit figure.
The Congressional Budget Office estimated last week that the US fiscal 2025 deficit fell only slightly to $1.817 trillion despite a $118 billion jump in customs revenue from Trump's tariffs.
"The deficit-to-GDP, which is the important number, now has a five in front of it," Mr Bessent said at the CNBC event.
Asked if he wanted to see a three at the start of the deficit-to-GDP ratio, Mr Bessent said, "Yes, it's still possible."
He added that the ratio would come down if the US could "grow more, spend less, and constrain spending."
