Treasury Warns: US Shutdown Could Cost $15 Billion A Week

By Staff, Agencies

A Treasury official clarified late on Wednesday that the ongoing US government shutdown, now entering its third week, may cost the US economy up to $15 billion per week in lost output.

The correction came after Treasury Secretary Scott Bessent earlier overstated the figure, claiming the cost could reach $15 billion per day.

Bessent had repeated the incorrect figure in two separate public appearances, as he urged Democrats to "be heroes" and work with Republicans to resolve the deadlock.

The revised estimate is based on findings from the White House Council of Economic Advisers, according to the Treasury official.

Speaking at a CNBC event held on the sidelines of the International Monetary Fund and World Bank annual meetings in Washington, Bessent warned that the prolonged shutdown is starting to "cut into the muscle" of the US economy.

He pointed to the robust wave of investment, especially in sectors like artificial intelligence, as a sign of economic strength, but cautioned that political gridlock now threatens that momentum.

"There is pent-up demand, but President [Donald] Trump has unleashed this boom with his policies," Bessent said, adding, "The only thing slowing us down here is this government shutdown."

Bessent credited Trump policies, including tax incentives and tariffs, with fueling what he described as a new investment boom.

"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," he said.

However, he stressed that continued growth requires an end to the federal shutdown, which has become a major obstacle to sustaining economic progress.

Separately, Bessent said the 2025 US budget deficit dropped from last year’s $1.833 trillion and projected the deficit-to-GDP ratio could fall to around 3% in the coming years.

The Congressional Budget Office estimated a slight deficit drop to $1.817 trillion, despite a $118 billion boost from Trump’s tariffs. Bessent noted the deficit-to-GDP ratio now "has a five in front of it."

Asked if he wanted to see a “three” at the start of the ratio, he replied: "Yes, it's still possible."

He emphasized that improving the fiscal picture will require the US to "grow more, spend less, and constrain spending."

On Friday, Trump blamed Democrats for his decision to lay off thousands of federal workers, as his administration began major job cuts across government agencies during the ongoing shutdown.

Layoffs hit several key agencies, including Treasury, IRS, HHS, Education, Commerce, and DHS cybersecurity, though the full extent is still unclear.

The cuts add to a major downsizing effort set to see 300,000 federal civilian workers leave in 2025. “They started this thing,” Trump said, calling the layoffs “Democrat-oriented.”