- Getty/Chip Somodevilla
- The government shutdown has entered into its fourth week.
- According to economists, the shutdown will take a bite out of the US economy.
- JPMorgan CEO Jamie Dimon warned on Tuesday that the shutdown will hurt the US economy, citing research that showed it could even push GDP to zero.
- “Someone estimated that if it goes on for the whole quarter, it can reduce growth to zero,” Dimon said.
JPMorgan Chase CEO Jamie Dimon on Tuesday sounded the alarm about the damage caused by the federal government shutdown.
“Someone estimated that if it goes on for the whole quarter, it can reduce growth to zero,” Dimon told reporters.
Pantheon Macroeconomics chief economist Ian Shepherdson wrote in a note to clients on Monday that US GDP could go negative if the shutdown extends through March.
“We have no way of estimating the impact on government contractors, or the second round effects when those businesses fail, or have to delay paying their employees, subcontractors, suppliers, and creditors, but it will not be trivial,” Shepherdson said. “Accordingly, if the shutdown were to last through the whole quarter, we would look for an outright decline in first quarter GDP.”
While Dimon did not offer his own estimate, the JPMorgan CEO reiterated that the shutdown is “not going to help the economy.”
Dimon said he was also concerned that the closure of the Securities and Exchange Commission during the shutdown could delay IPOs. He called the issue “problematic.”
But Dimon suggested he was resigned to the fact that the bank can’t do much about the situation and will have to take the lumps as they come.
“We just have to deal with that,” he said. “It’s more of a political issue than anything else.”
Outside of the shutdown’s potential impact, Dimon maintained a fairly upbeat view on the US economy, citing strong consumer spending.
Most economists estimate that the shutdown will shave off 0.05 to 0.1 percentage points from quarterly GDP for each week that the closure continues. But as the shutdown drags into historic territory, some analysts warned that the effects could start to compound and result in a worse economic hit than expected.
“So far, the indirect impacts have been limited, but they will be become a greater drag on growth as the shutdown continues.” Bank of America Merrill Lynch economists Joseph Song, Michelle Meyer, and Anna Zhou wrote in a note to clients.