The chairman of President Donald Trump’s Council of Economic Advisers said Wednesday the United States could post no economic growth in the first quarter if the federal government does not reopen.
“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.
Asked whether GDP growth could hit zero in the quarter, Hassett said “Yes, we could.”
“But then again, the second-quarter number would be humongous if the government reopened. It would be like 4 or 5 percent,” Hassett said.
In recent decades, GDP growth in the first quarter has been notably weaker than growth in other quarters.
The federal government shutdown was in its 33rd day Wednesday, with little sign of relief for the roughly 800,000 federal workers going without pay. The Senate on Thursday is holding votes on competing GOP and Democratic proposals that would fund the government through Feb. 8. Neither measure is expected to pass because of the parties’ standoff over President Donald Trump’s demand for $5.7 billion for a wall along the Mexican border.
Hassett added later in the CNN interview that he believes the United States and China could reach a trade deal by the March 2 deadline.
Trade negotiations between Washington and Beijing have stretched for months amid their tit-for-tat trade war. The countries reached a truce following Trump’s meeting with Chinese President Xi Jinping in Argentina on Dec. 1.