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Here's what the area missed—temporarily—thanks to the federal funding agreement

May 2, 2017

The brinkmanship in the federal government is over, at least until September, as Congressional negotiators reached an agreement to fund the government through that month.

Employers and employees of Washington, D.C.-area businesses are breathing easier, but only until negotiations resume because anything other than a short-term shutdown will have a significant impact on the local economy, two George Mason University economists said.

“If a shutdown lasts for a day or two, or even a few days, it’s not that big of a deal,” said Terry Clower, director of George Mason University’s Center for Regional Analysis. “However, if it lasts for weeks, then there are serious, if short-term, consequences.”

Stephen Fuller, director of Mason’s Stephen S. Fuller Institute for Research on the Washington Region’s Economic Future, said a short shutdown would have “far less impact than a snowstorm.”

“In all past shutdowns, the furloughed workers eventually got their pay for those lost days and the long-term economic impact of the shutdown was immeasurable,” he said.

Clower said a longer, more damaging shutdown and another sequester could still be in the offing.

“More troubling would be a scenario where we can’t get a deal done in the fall on the [fiscal] 2018 budget,” he said. “If you combine a shutdown with a new round of sequestration, then we are back to 2013-14.”

“The sequester had deep impacts on federal and contractor jobs and spending,” added Fuller. “The sequester took the regional economy negative—0.5 percent—in 2013 while the U.S. economy grew 1.5 percent.”

Stephen Fuller can be reached at 703-993-3186 and sfuller2@gmu.edu.

Terry Clower can be reached at 703-993-8419 and tclower@gmu.edu.

For more information, contact Buzz McClain at 703-727-0230 or bmcclai2@gmu.edu.

About George Mason

George Mason University is Virginia’s largest public research university. Located near Washington, D.C., Mason enrolls 35,000 students from 130 countries and all 50 states. Mason has grown rapidly over the past half-century and is recognized for its innovation and entrepreneurship, remarkable diversity and commitment to accessibility.