US shutdown damage ‘far worse’ than estimated – White House aide

The ongoing standoff has severely impacted travel, hotel, and construction sectors, an economic adviser has said

The US government shutdown is inflicting “far worse” economic damage than had been estimated and could cut fourth quarter GDP growth in half, White House economic adviser Kevin Hassett has warned.

The 38-day shutdown, the longest in US history, is hitting travel, hotel and construction sectors particularly hard, he told Fox Business in an interview on Friday.

”The impact on the economy is far worse than we expected because it’s gone on for so long,” he said.

The repercussions of the shutdown could slice 1% to 1.5% from US GDP growth in the October-December period, Hassett said, citing recent estimates from Goldman Sachs.

“We were going to have at least 3% growth in the fourth quarter… now we’re expecting something like half that,” he added.

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“Travel and leisure is a place that’s really being heavily hit right now,” Hassett noted, warning that if the shutdown continues to affect air travel employees’ wages for “another week or two,” the sector could face “a near-term downturn.”

US airlines have canceled around 700 flights at 40 major airports around the country on Friday, following cuts recently announced by the Federal Aviation Administration (FAA), multiple outlets have reported.

Amid air traffic controller staff shortages caused by the shutdown, the FAA ordered a 4% reduction in flights on Friday. The cuts are set to gradually rise to 10% by the same time next week if the shutdown continues, according to the FAA’s emergency order.