White House Adviser Kevin Hassett Predicts Economic Rebound Once Government Reopens

In a recent interview, Kevin Hassett a senior economic adviser to the White House stated that while the U.S. economy is suffering from the ongoing federal government shutdown, a meaningful rebound is expected once governmental operations resume. “When the government reopens, we’ll make back a lot of the damage,” Hassett said, inserting optimism into a situation that analysts believe is increasingly fraught with risk. 

The remarks come amid the second-longest U.S. federal government shutdown in history, which has now stretched into its fourth week. According to J.P. Morgan Chase & Co., each additional week of the shutdown may shave off around 0.1 percentage points from GDP growth, introducing both immediate pain and possible longer-term damage. 

Hassett argued that much of the economic drag stems from furloughed federal employees, halted services, delayed contracts and suspended data releases all of which have disrupted spending, supply chains and business planning. However, he maintained confidence that once the shutdown ends, the pent-up demand and resumed federal paychecks will help boost growth again.

The Bigger Picture: Why the Economy Faces Headwinds

From an economic theory standpoint, the shutdown represents a negative supply-shock: government workers are either unpaid or out of work, contractor payments are delayed, and federal services that support commerce are interrupted. Combined, these factors reduce aggregate demand and disrupt fiscal flows.

Hassett’s forecast rests on the idea of a “bounce-back effect” the notion that when the shock is lifted, spending patterns return and lost output is largely recovered. Yet analysts caution that not all of the damage is reversible. For example, some projects delayed during the shutdown will never be made up, leading to “scarring effects” on growth.

Indeed, the Congressional Budget Office estimated that the 2018-19 shutdown cost the U.S. economy at least $11 billion, of which around $3 billion was permanently lost. 

What This Means for Policymakers and Markets

For policymakers, the message is clear: reopening the government as soon as possible reduces both the depth and duration of economic damage. According to the shutdown-data pipeline, each week of closure makes the recovery more painfully slow and uncertain. 

For markets and business leaders, the key takeaway is two-fold. First, uncertainty remains elevated until federal services, data releases and payments resume. Second, while rebound potential is real, businesses must plan for a scenario where some productivity and spending shortfalls may not be fully recovered.

Hassett’s remarks project cautious optimism, but they also implicitly accept that some of the hit to GDP will be permanent despite the hope of a rebound once the government reopens.

FAQs

Q1: Who is Kevin Hassett and what did he say about the economy?
Kevin Hassett is White House economic adviser. He stated that the U.S. economy will rebound once the government reopens, though parts of the shutdown’s damage may not be recoverable. 

Q2: How long has the U.S. government been shut down and what is the economic impact?
The shutdown has reached over four weeks, with reports suggesting each week reduces U.S. GDP growth by about 0.1 percentage points. 

Q3: Will the economy make back all lost output once the government reopens?
Not entirely. While a rebound is likely, analysts caution that some output losses are permanent and cannot be fully recovered. 

Q4: What sectors are most affected by the shutdown?
Federal employment and contracting, federal research and data releases, and businesses reliant on federal services are among the most affected sectors.

Q5: What can business and investors expect in the short term?
Expect elevated uncertainty, delayed spending, and cautious business sentiment until federal operations resume and data flow returns to normal.

Q6: Does this suggest the economy will enter a recession?
Hassett and analysts believe a recession is unlikely if the shutdown ends soon, but prolonged closure raises risks of recession and longer-term scarring.