By Chris Isidore@CNNMoneyOctober 8, 2013: 11:48 AM ET
NEW YORK (CNNMoney)
If the week-long government shutdown stretches to a month, it would mean a $50 billion blow to the U.S. economy.
That estimate is actually $5 billion lower than the initial estimate of Mark Zandi, chief economist for Moody's Analytics. He lowered his forecast after the Defense Department recalled nearly half of 800,000 federal employees furloughed last week, and it appeared Congress would quickly approve a measure to pay other furloughed workers retroactively.
But Handler agrees on one thing: the direct loss from the shutdown will be smaller than the indirect hit to the economy due to the current political uncertainty. He said the rising worries about gridlock on the question of raising the debt ceiling will be the largest drag.
And he believes that will be the case even though his firm is forecasting that Congress will raise the debt ceiling at the 11th hour.
"But that will still cause some economic disruption," he said. "Both businesses and consumers will want to cut back or at least defer spending plans until things are settled."