The news media worried a lot about how awful the government shutdown would be and estimated it would take a huge toll on the economy as well. Now it looks like they were wrong about the size of the damage.
The networks touted a recent Standard & Poor’s (S&P) estimate that the shutdown would cost $24 billion. That figure was mentioned on the networks five times from Oct. 17 to Oct. 24. But according to new figures from the Office of Management and Budget (OMB), the economic toll was one-fourth that size or less: between $2 billion and $6 billion. The OMB estimate was only mentioned in one Nov. 8 story on CBS, according to a Nexis search from Nov. 7 through Nov. 10.
Some media outlets had also predicted that October jobs data would reveal widespread job losses as a result of the shutdown. That turned out not to be the case.
The OMB announced Nov. 7 that the shutdown cost between $2 and $6 billion, just a fraction of what has been reported by media outlets. The Huffington Post described OMB’s report as “the most detailed insight to date.”
ABC, NBC, and CBS had all previously reported the S&P estimate of $24 billion. But in those stories, only NBC’s Peter Alexander alluded to other cost estimates, saying “the cost of the economy by one good estimate: roughly $24 billion” on Oct. 17’s “Today Show.” He failed to bring up any other, less expensive projections. Yet, the networks barely covered the OMB report contradicting their earlier stories.
The S&P estimate wasn’t the only analysis available, but it was the one with the highest price tag. While The New York Times cited the $24 billion prediction on Oct. 17, they call it “more pessimistic” than a $12 billion estimate from Macroeconomic Advisers. On Oct. 18, the Times also reported a much smaller study by economic researchers IHS Global Insight which predicted a loss of $3.1 billion.
Media outlets also expected a dismal jobs report on Nov. 8 from Bureau of Labor Statistics (BLS) because of the shutdown. But the report showed 204,000 jobs were created in October and expressly stated that the shutdown had no impact on job creation.
The BLS said “there were no discernible impacts of the partial federal government shutdown on the estimates of employment, hours, and earnings,” refuting any connection to the shutdown.
That was the opposite of media expectations. NBC correspondent Ron Mott, reporting on the September jobs data, on Oct. 22’s “Nightly News,” said “the next one could be even worse.” CNBC’s Steve Liesman had already attempted to blame the weak September data on the shutdown, on Oct. 22’s “Squawk Box,” calling it “the Senator Ted Cruz jobs report.”
CNBC “Squawk Box” co-anchor Aaron Ross Sorkin said, just thirty minutes before the BLS data went public Nov. 8, “Employment expected to take a hit from the government shutdown so don’t be surprised by a temporary drop in payrolls.” This same segment began with the voiceover: “Assessing the damage, the latest jobs report is in. How did the shutdown impact the numbers?”
The BLS report actually showed 204,000 jobs added in October. It also revised previous estimates for August and September, adding 60,000 jobs for those two months. In fact, October job creation outstripped expectations by over 80,000.
The October jobs report was widely regarded as good news, contrary to predictions. CNBC’s editor Rick Santelli even said on Nov. 8’s “Squawk Box” that “Maybe they should close the government every other week if we get data like this.”
But there were concerns about some of the underlying data. BLS said the total unemployment rate rose to 7.3 percent and the data showed that 720,000 Americans gave up looking for jobs. These numbers are part of a long-term trend during the Obama administration.